Question: Use the table for the question(s) below. Consider the following four bonds that pay annual coupons: Bond Years to Maturity Coupon YTM A 1 0%

Use the table for the question(s) below.

Consider the following four bonds that pay annual coupons:

Bond Years to Maturity Coupon YTM
A 1 0% 5%
B 5 6% 7%
C 10 10% 9%
D 20 0% 8%

a) What is the percentage change in the price of the bond "A" if its yield to maturity increases by 1% point from 5% to 6%?

b) Which of the four bonds is the most sensitive to a one percent increase in the YTM?

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