using the provided image - the objective is to use the information and the rule of 70 to find the value of bonds.

PROBLEM 3 Bond C pays $8,000 in 10 years. Bond D pays $8,000 in 20 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.) Lets assume the interest rate is 7% 1. Using the rule of 70, the value of Bond C is approximately (:1; ) and the value of Bond D is approximately ($ ) Answer choices include (500 I 1,000 I 2,000 I 4,000) Now lets assume the interest rate increases to 14% 2. Using the rule of 70, the value of Bond C is now approximately ($ ) and the value of Bond D is approximately ($ ) Answer choices include (500 I 1,000 I 2,000 I 4,000) 3. Comparing each bond's value at 7 percent versus 14 percent, Bond C's value decreases by a (BIGGER I SMALLER) percentage than Bond D's value. 4. The value of a bond (INCREASES I DECREASES) when the interest rate increases, and bonds with a longer time to maturity are (LESS I MORE) sensitive to the changes in the interest rate