D. Bond D, because it has the highest coupon and shortest maturity.

Consider the following bonds: Bond A B Coupon Rate (annual payments) 0% 0% 5% 9% Maturity (years) 13 12 13 a. What is the percentage change in the price of each bond if its yield to maturity falls from 4% to 3%? b. Which of the bonds A-D is most sensitive to a 1% drop in interest rates from 4% to 3% and why? Which bond is least sensitive? Provide an intuitive explanation for your answer. Note: Assume annual compounding, a. What is the percentage change in the price of each bond if its yield to maturity falls from 4% to 3%? The percentage change in bond A is %. (Round to two decimal places.) The percentage change in bond B is %. (Round to two decimal places.) The percentage change in bond C is %. (Round to two decimal places.) The percentage change in bond D is %. (Round to two decimal places.) b. Which of the bonds A through D is most sensitive to a 1% drop in interest rates, from 4% to 3%, and why? (Select the best choice below.) O A. Bond A, because it has the lowest coupon and longest maturity. O B. Bond B, because it has the lowest coupon and shortest maturity. O C. Bond C, because it has the shortest maturity and is the coupon bond with the lowest coupon. O D. Bond D, because it has the highest coupon and shortest maturity. Which of the bonds A through D is least sensitive to a 1% drop in interest rates, from 4% to 3%, and why? (Select the best choice below.) O A. Bond A, because it has the lowest coupon and longest maturity. O B. Bond B, because it has the lowest coupon and shortest maturity. OC. Bond C, because it has the shortest maturity and is the coupon bond with the lowest coupon