The market price of Bond A is $1,196, and Bond B sells for $775. If the required market return on these bonds decreases by 0.1%, the prices of Bond A and Bond B will be $1,208 and $784, respectively. Conversely, if the required market return on these bonds goes up by 0.1%, Bond A and Bond B will sell for $1,185 and $766, respectively. Which bond has greater sensitivity to changes in interest rates?
Bond B
Bond B, when interest rates go up, and Bond A, when the rates decline.
Bonds A and B have equal sensitivity to changes in interest rates.
Bond A