You own a corporate bond that has $26$ years remaining until maturity. This bond has a par value of $$100,000,$ a coupon rate of $9\mathrm{.}5\%.$

Someone else owns a corporate bond from the same issuing company that has $5$ years remaining until maturity. Otherwise, this bond is the same as your bond, with a $$100,000$ par value and $9\mathrm{.}5\%$ coupon rate.

If interest rates drop, the value of each of these bonds will be impacted, but they will be impacted differently. Explain how$/$why a drop in interest rates will impact the valuation of these two bonds.

Group of answer choices

The price of both bonds will drop, and the $26$ year bond will drop more than the $5$ year bond.

The price of both bonds will drop, and the $26$ year bond will drop less than the $5$ year bond.

The price of both bonds will increase, and the $26$ year bond will increase more than the $5$ year bond.

The price of both bonds will increase, and the $26$ year bond will increase less than the $5$ year bond.