Question: . Consider the following two bonds both having a par value of $ 1 , 0 0 0 . - 3 0 - year bond

. Consider the following two bonds both having a par value of $1,000.
-30-year bond that pays a 5% annual coupon
-2-year bond that pays a 5% annual coupon
A) What is the price of each bond assuming the market interest rate =5%?
B) What is the price of each bond if the market interest rate decreases to 4%?
C) What do you notice about the percent change in each bonds price for the
same decline in interest rate?

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