Question $16$

$4$ pts

You hold two bonds from Microsoft Inc. Bond A pays a $$120$ annual coupon payment and matures in $5$ years, while bonds B pays a $$120$ annual coupon payment and matures in $30$ years. For both bonds, your required rate of return is $10\%.$ If the interest rate suddenly increases, which the following statement is most correct?

Bond A has higher interest risk when interest rate suddenly increases

Bond $B$ has higher interest risk when interest rate suddenly increases

Neither A nor $B$ has interest rate risk.

Bond A and $B$ have the same interest risk when interest rate suddenly increases.