Consider the following bonds:

$\backslash$table$[[$Bond$,$Coupon Rate $($annual payments$),$Maturity $($years$)],[$A$,0\%,14],[$B$,0\%,10],[$C$,5\%,14],[$D$,11\%,10]]$

a$.$ What is the percentage change in the price of each bond if its yield to maturity falls from $8\%$ to $7\%?$

b$.$ Which of the bonds A $-$ D is most sensitive to a $1\%$ drop in interest rates from $8\%$ to $7\%$ and why? Which bond is least sensitive$?$ Provide an intuitive explanation for your answer.

Note: Assume annual compounding.

a$.$ What is the percentage change in the price of each bond if its yleld to maturity falls from $8\%$ to $7\%?$

The percentage change in bond $A$ is

$\%.($Round to two decimal places.$)$

The percentage change in bond $B$ is

$\%.($Round to two decimal places.$)$

The percentage change in bond $C$ is $\%.($Round to two decimal places.$)$

The percentage change in bond $D$ is $\%.($Round to two decimal places.$)$

b$.$ Which of the bonds A through $D$ is most sensitive to a $1\%$ drop in interest rates, from $8\%$ to $7\%,$ and why? $($Select the best choice below.$)$

A$.$ Bond $A,$ because it has the lowest coupon and longest maturity.

B$.$ Bond $B,$ because it has the lowest coupon and shortest maturity.

C$.$ Bond $C,$ because it has the shortest maturity and is the coupon bond with the lowest coupon.

D$.$ Bond $D,$ because it has the highest coupon and shortest maturity.

Which of the bonds A through $D$ is least sensitive to a $1\%$ drop in interest rates, from $8\%$ to $7\%,$ and why? $($Select the