PROBLEMS: 1. Kelly is considering investing in one of two bonds. The bonds are both $1,000 par value and have 10.5% annual coupon rates. Bond A has 7 years to maturity and bond B has 12 years to maturity. Currents yields are 8.5% for each bond. Calculate the current value of each bond and explain which bond you would purchase if you wanted to minimize interest rate risk? If yields decreased by 1.0% in one year, what would be the new bond prices and show the % return from each bond. (10 points)