There are four bonds which pay annual coupons and have the same yield-to-maturity. But they differ in couple rate and time to maturity.

Bond Time to maturity Coupon rate

Bond 1 3 years 3%

Bond 2 3 years 8%

Bond 3 7 years 3%

Bond 4 7 years 8%

If the yield-to-maturity for all bonds changes by 1%, which bond will experience the largest percentage change in price?

Select one:

A. The bond with the time to maturity of 3 years and the coupon rate of 8%

B. The bond with the time to maturity of 3 years and the coupon rate of 3%

C. The bond with the time to maturity of 7 years and the coupon rate of 3%

D. The bond with the time to maturity of 7 years and the coupon rate of 8%

E. The percentage change in price will be the same across four bonds