Use the following data to answer question 1: Par Value Time to Maturity Coupon Current Price Yield to Maturity $1,000 20 years 10% (paid annually) S850 12% 1. Given the bond described above, if interest were paid semi-annually (rather than annually), and the bond continued to be priced at $850, the resulting effective annual yieldt EAY (1+semi-annual yield) -11 a. Less than 12% b. More than 12% 12% Cannot be determined none of the above d. e. 2. Holding other factors constant, the interest rate risk of a coupon bond is higher when the bond's: a. term-to-maturity is lower. b. coupon rate is higher. c. yield to maturity is lower. d. current yield is higher. e. cannot be determined Which of the following two bonds is more price sensitive to changes in interest rates? I . A par value bond, X, with a 5-year-to-maturity and a 10% coupon rate. 2, A zero coupon bond, Y, with a 5-year-to-maturity and a 10% yield-to-maturity. a. Bond X because of the higher yield to maturity. b. Bond X because of the longer time to maturity c. Bond Y because of the longer duration. d. Both have the same sensitivity because both have the same yield to maturity. e. Cannot be determined 3