Both Bond Bill and Bond Ted have 9.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000.

Explanation:

I think your question is missed of key information, allow me to add in and hope it will fit the original one.  

Both Bond Bill and Bond Ted have 9.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds?  

My

New yield will be = 9.4℅ + 3℅ = 12.4℅

Semi annual yield = 12.4/2 = 6.2℅

Nper: 5*2 =10

Coupon rate:  9.4%/2 = 4.7% semiannual

=> Coupon payment: 4.7%*1,000 = $47

Using present value formula in excel

pv=(rate,nper,pmt,fv)

pv= (6.2%, 10, 47, 1000)

pv= 890.64

=> Therefore, ℅ change =

(890.64  - 1000) / 1000 = -10.94%

New yield will be = 9.4℅ + 3℅ = 12.4℅

Semi annual yield = 12.4/2 = 6.2℅

Nper: 22*2 =44

Coupon rate:  9.4%/2 = 4.7% semiannual

=> Coupon payment: 4.7%*1,000 = $47

Using present value formula in excel

pv=(rate,nper,pmt,fv)

pv= (6.2%, 44, 47, 1000)

pv = $775.21

=> Therefore, ℅ change :

(775.21  - 1000) / 1000 = -22.47%

answer; i believe the correct answer is (a) purchase of treasury stock;