Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1000 par values and 9% coupon interest rates and pay annual interest. Bond A has exactly 9 years to maturity, and bond B has 19 years to maturity.

A. Calculate the present value of bond A if the required rate of return is: (1) 6%, (2) 9%, and (3) 12%.

B. Calculate the present value of bond B if the required rate of return is: (1) 6%, (2) 9%, and (3) 12%.

C. From your findings in parts a and b, discuss the relationship between time to maturity and changing required returns.

D. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why?