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Consider three bonds with 5.90% coupon rates, all making annualcoupon payments and all selling at face value. The short-term bondhas a maturity of 4 years, the intermediate-term bond has amaturity of 8 years, and the long-term bond has a maturity of 30years.

a. What will be the price of the 4-year bond ifits yield increases to 6.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

b. What will be the price of the 8-year bond ifits yield increases to 6.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

c. What will be the price of the 30-year bondif its yield increases to 6.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

d. What will be the price of the 4-year bond ifits yield decreases to 4.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

e. What will be the price of the 8-year bond ifits yield decreases to 4.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

f. What will be the price of the 30-year bondif its yield decreases to 4.90%? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)

g. Comparing your answers to parts (a), (b),and (c), are long-term bonds more or less affected than short-termbonds by a rise in interest rates?

• More affected

• Less affected

h. Comparing your answers to parts (d), (e),and (f), are long-term bonds more or less affected than short-termbonds by a decline in interest rates?

• More affected

• Less affected