Answer:
Option D or the Last statement is the correct one.
Step-by-step explanation:
As we can see, this is a multiple choice question with four options A, B , C , D.
And we are given two Bonds F and G.
Par Value of Both Bonds = $1000
Bond F Maturity = 15 Years
Bond G Maturity = 26 Years
Both Pays Interest = $90 Annually
Yield to Maturity Change from = 9% to 10%
So,
The correction option to this question is option D. The Last Statement.
Option D = Both bonds will decrease in value, but bond G will decrease more than bond F.
Reasoning:
The reason behind this answer is related to number of years of maturity of the bond. There is a simple rule that, Longer the maturity, the greater the price change when interest rates changes. Similarly, Shorter the maturity, the shorter the price change when interest rates change. So, here in this case, Bond G has greater number of years of maturity which is 26 Years as compared to Bond F.