Each of the following bonds has a $100 par value.

Bond

Coupon interest rate

(% p.a.)

Coupon payment

Years to maturity

Yield to maturity

(% p.a.)

X

10

Annual

10

9

Y

8

Semi-annual

10

9

a)Calculate the value of each bond (10 marks)

b)Which bond, X or Y, has the higher interest rate risk and why? (5 marks)