Calculate the percentage change in price of each bond

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Reference no: EM131950850

Bond A is a 6 % coupon bond and makes annual payments with 10 years to maturity. Bond B is a 6% coupon bond and makes annual payments with 20 years to maturity. Both bonds have a market required return of 10% and face value of 1,000.

Calculate the percentage change in price of each bond. Which bond does carry greater interest rate risk? Why? Show your work.

Reference no: EM131950850

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