Which of the following statements is CORRECT
1. A $1000 bond with $100 annual interest payments that has 5 years to maturity and is not
expected to default would sell at a discount if interest rates were below 9% and at a premium if interest rates were greater than 11%. 2. The price of a 20-year 10% bond is less sensitive to changes in interest rates than the price of a 5-year 10%
bond. 3. A 10-year 10% coupon bond has less reinvestment rate risk than a 10-year 5% coupon bond (assuming all else
equal). 4. 10-year zero coupon bonds have more reinvestment rate risk than 10-year 10% coupon bonds.