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Consider three bonds with maturities of 5, 10, and 15 years. Each bond has a coupon rate of 6% and sells at its face value of $1,000. Assume annual coupon payments. Use this information to answer the following questions: (a) What would be the market price of each bond if their yields to maturity (YTMs) were 4%? (b) What would be the market price of each bond if their YTMs were 8%? (c) Graph the relationship between bond prices and the YTMs for the 3 bonds. What conclusions can you draw regarding the relationship between time to maturity and the sensitivity of bond prices to changes in interest rates?

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