On May 30, 2012, Janice Kerr is considering one of the newly issued 10-year AAA corporate bonds shown in the following exhibit. Description                           Coupon   Price         Callable           Call Price Sentinal, due May 30, 2022  6.00%       100           Noncallable          NA Colina, due May 30, 2022    6.20%        100          Currently callable   102 a. Suppose that market interest rates decline by 100 basis points (i.e., 1%). Contrast the effect of this decline on the price of each bond. b. Should Kerr prefer the Colina over the Sentinal bond when rates are expected to rise or to fall?

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