Question 1 [20 Marks] Bond J is a 4% coupon bond. Bond S is a 10% coupon bond. Both bonds have eight years to maturity, $1000 face value, make annual payments, and have a YTM of 6%. a. If interest rates suddenly rise by 2%, what is the percentage price change of these two bonds? [5 Marks] b. What if rates suddenly fall by 2% instead, what is the percentage price change? [5 Marks] c. What does this problem tell you about the interest rate risk of lower-coupon bonds? [5 Marks] d. Assume Bond J will be retired in three years. Using the above information, calculate the duration of Bond J when the YTM is 8%. [5 Marks)