Consider three bonds with 6.7% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has a maturity of 30 years.
a. What will be the price of each bond if their yields increase to 7.7%?
b. What will be the price of each bond if their yields decrease to 5.7%?