Consider the following bonds:(Click on the following icon

in order to copy its contents into a spreadsheet.)

Bond	Coupon Rate (annual payments)	Maturity (years)
A	0%	13
B	0%	8
C	4%	13
D	11%	8

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.

Question content area bottom

Part 1

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 bond A is

enter your response here%.