Question $13(1$ point$)$

An investor has two bonds in his portfolio that have a face value of $$1,000$ and pay a $10\mathrm{.}50\%$ annual coupon. Bond Alpha matures In $5$ years, while Bond Beta matures in $1$ year.

a$)$ What will the value of each bond be if the going interest rate is $11\%?$

b$)$ Which bond will have the greater percentage change in price if interest rates increase by $1$ percentage point?

a$)$ Alpha $=$$$995\mathrm{.}50$; Beta $=$$$981\mathrm{.}52$ change in price.

b$)$ Beta will have a greater percentage

a$)$ Alpha $=$$$1,000\mathrm{.}00$; Beta $=$$$981\mathrm{.}52$

b$)$ Alpha will have a greater percentage change in price.

a$)$ Alpha $=$$$981\mathrm{.}52$; Beta $=$$$995\mathrm{.}50$

b$)$ Alpha will have a greater percentage change in price.

a$)$ Alpha $=$$$981\mathrm{.}52$; Beta $=$$$995\mathrm{.}50$ change in price.

b$)$ Beta will have a greater percentage

a$)$ Alpha $=$$$995\mathrm{.}50$; Beta $=$$$1,000\mathrm{.}00$

b$)$ Alpha will have a greater percentage change in price.