Question: There are two US Treasury bonds with the same maturity. Bond X with an annual coupon of 12% and Bond Y with an annual coupon

There are two US Treasury bonds with the same maturity. Bond X with an annual coupon of 12% and Bond Y with an annual coupon of 4%. All bonds will have a YTM of 8%. Assume YTM remains constant until maturity.

How many of the statement(s) below is/are Correct?

Type 0, 1, 2, 3, or 4 as your answer. For example, 0 means none of the statements is correct. 2 means two of the statements are Correct.

The price of Bond X will decrease towards maturity, but the price of Bond Y will increase towards maturity.
The price of both bonds will increase by 8% per year.
The price of both bonds will increase towards maturity, but the price of Bond X will increase by a larger extent.
The prices of both bonds will remain unchanged.

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