Question: Please explain in detail how you reached the answer and show mathematical calculations (and not just the results). You are interested in two bonds. Coupons

Please explain in detail how you reached the answer and show mathematical calculations (and not just the results).

You are interested in two bonds. Coupons are paid annually. Which bonds price will change more (in percentage terms) as interest rates fall? Why?

Bond

Matures in

Coupon Rate

Current Price

Smith Inc.

5 years

8%

$1000.00

Vortex

10 years

5%

$798.70

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