The assignment content presents a scenario where an investor is considering purchasing a 20-year bond with a par value of $8,500 and a coupon rate of 3.2%. The market interest rate has risen to 7.5%, causing the bond to sell at a discount. To understand interest rate risk, we must consider how bond values change when market rates fluctuate. Longer-term bonds are more sensitive to changes in market interest rates than shorter-term bonds. Using TVM templates, we can see that when the market rate increases from 10% to 15%, the value of the 25-year bond decreases significantly more than the 1-year bond. This shows how longer-term bonds are more affected by interest rate changes.