Which of the following bonds has the highest interest rate risk? All bonds have the same face value and make annual coupon payments.

A. 10-year bonds with 5% coupon rate B. 10-year bonds with 4% coupon rate C. 10-year bonds with 3% coupon rate D. 5-year bonds with 6% coupon rate E. 5-year bonds with 5% coupon rate

The Grand Adventure has a 7-year, 6 percent annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Which one of the following statements is correct if the market yield suddenly increases to 7 percent? A. The bond price will increase by $57.14. B. The bond price will increase by 5.29 percent. C. The bond price will decrease by $53.62. D. The bond price will decrease by 8 percent. E. The bond price will decrease by 8.36 percent.

Which one is correct and why?