What Happens to the Price of a Bond with a $100

Multiple Choice

What happens to the price of a bond with a $100 face value and an infinite maturity date when interest rates rise from 5 percent to 10 percent and the coupon paid on the bond is $20?

A) The price falls by $100.
B) The price rises by $200.
C) The price rises by $100.
D) The price falls by $1.
E) The price falls by $200.