Consider three bonds with 5.4% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.

a.

What will be the price of each bond if their yields increase to 6.4%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years 8 Years 30 Years Bond price $ $ $

b.

What will be the price of each bond if their yields decrease to 4.4%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years 8 Years 30 Years Bond price $ $ $

c. Are long-term bonds more or less affected than short-term bonds by a rise in interest rates?

More affected Less affected

d. Would you expect long-term bonds to be more or less affected by a fall in interest rates?

More affected Less affected