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Consider the following bonds: a. What is the percentage change in the price of each bond if its yield to maturity falls from 5%

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Consider the following bonds: a. What is the percentage change in the price of each bond if its yield to maturity falls from 5% to 4%? b. Which of the bonds A through D is the most sensitive to a 1% drop in interest rates from 5% to 4% and why? Which bond is the least sensitive? Provide an intuitive explanation for your answer. Note: Assume annual compounding and $1,000 of the bond's face value. a. What is the percentage change in the price of each bond if its yield to maturity falls from 5% to 4%? The percentage change in the price of bond A is 17.66 %. (Round to two decimal places.) The percentage change in the price of bond B is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Bond ABCD Coupon Rate (annual payments) 0% 0% 6% 11% Print Done Maturity (years) 17 8 17 8 -

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