Question:
Create an example where two bonds have identical maturity time. The difference is their coupon rates. Then, for the following year, decrease the ongoing market rate by 1 or 2 or 3 percent, and calculate the change in the price of both bonds. Which one provides the largest positive change? Why?
Please illustrate your answer on a graph for changing bond prices when interest rate changes for two bonds. (Bond prices on the Y-axis and interest rates on the X-axis)