Question: Interest Rate Risk. Consider two bonds, a 3 - year bond paying an annual coupon of 5 % and a 1 0 - year bond

Interest Rate Risk. Consider two bonds, a 3-year bond paying an
annual coupon of 5% and a 10-year bond also with an annual coupon
of 5%. Both currently sell at face value. Now suppose interest
rates rise to 10%.(LO6-3) a. What is the new price of the 3-year
bonds? b. What is the new price of the 10-year bonds? c. Do you
conclude that long-term or short-term bonds are more sensitive to a
change in interest rates?

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