1) You are considering two different bonds in which to invest. Both bonds pay interest annually. Bond A has a face value of $1,000, a coupon rate of 5%, a yield-to-maturity of 6%, and matures in five years. Bond B has a face value of $1,000, a coupon rate of 5%, a yield-to-maturity of 6%, and matures in twenty years. Which bond has more interest rate risk?

Bond A or Bond B ?

2) A company has 7.5% semi-annual bonds outstanding with sixteen years to maturity. If the bonds are currently selling for $1,012.50 each, then is the yield-to-maturity greater than, less than, or equal to the coupon rate of 7.5%?

a )less than

b) equal to

c) greater than