Consider the following bonds:

$\backslash$table$[[$Bond$,$Coupon Rate $($annual payments$),$Maturity $($years$)],[$A$,0\%,13],[$B$,0\%,10],[$C$,2\%,13],[$D$,8\%,10]]$

a$.$ What is the percentage change in the price of each bond if its yield to maturity falls from $4\%$ to $3\%?$

b$.$ Which of the bonds A$-$D is most sensitive to a $1\%$ drop in interest rates from $4\%$ to $3\%$ and why? Which b answer.

Note: Assume annual compounding.

a$.$ What is the percentage change in the price of each bond if its yield to maturity falls from $4\%$ to $3\%?$ The percentage change in bond $A$ is $13\mathrm{.}38\%.($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 Kensitive to a $1\%$ drop in interest rates, from $4\%$ to $3\%,$ and why?

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.