Question: 4. (8 marks) Consider two $1,000 par coupon bonds, A and B. Bond A has a coupon rate of 5% with ten-year maturity and bond

4. (8 marks) Consider two $1,000 par coupon bonds, A and B. Bond A has a coupon rate of 5% with ten-year maturity and bond B has a coupon rate of 8% with five years until maturity. a. Define interest rate risk.(2 marks) b. Proof that Bond A has higher interest risk than bond B.(6 marks)

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