Using excel, illustrate and check the following observations on bonds and interest rate sensitivity.

You can use any set of a given bond's characteristics of your choosing.

1. Prices of long-term bonds tend to be more sensitive to interest rate changes than prices of short-term bonds.

2. Bond prices' sensitivity to changes in yields increases at a decreasing rate as maturity increases.

3. Interest rate risk is inversely related to the bond's coupon rate. Prices of low-coupon bonds are more sensitive to changes in interest rates than prices of high-coupon bonds.

4. The sensitivity of a bond's price to a change in its yield to maturity is inversely related to the yield to maturity at which the bond is currently selling.

You can make up the excel macros.