Question: Compare the two bonds below. If yields unexpectedly rise 3%, which bond has more interest rate risk? What is the percentage decline in each bond?

Compare the two bonds below. If yields unexpectedly rise 3%, which bond has more interest rate risk? What is the percentage decline in each bond? Bond A is a $1,000 face value bond priced at par that pays an 8% semiannual coupon and 20 years of remaining maturity. Bond B is a $1,000 face value bond priced at par that pays an 4% semiannual coupon and has 20 years of remaining maturity.

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