Which bond is riskiest?

Years to Maturity : The greater the length of the bond’s remaining term, the more sensitive it will be to changes in interest rates. Thus, a 1-year bond will change less than a 10-year bond or a 30-year bond, but it will have the same sensitivity to interest rates as a 30-year bond with 1 year to go until maturity. Thus, bonds with longer remaining terms will be more volatile than those with less time until maturity.

Cupon : Bonds with higher yields will be less volatile than bonds with low yields. Bonds with yields well above prevailing interest rates are sometimes called cushion bonds , because these bonds help to cushion against falling prices. When a bond’s yield is already high, then changes in interest rates will have less effect on its price than a bond with a lower yield.

Another factor is that the present value of a bond’s payment stream is higher for a higher yielding bond, because an investor receives more money in a given time period with the high-yielding bond than with the lower-yielding bond. For this reason, zero coupon bonds have the most volatility for a given discount, because the only payment is received at the end of the bond’s term.

Read more in http://thismatter.com/money/bonds/bond-volatility.htm

Who read the related Wiki should have known this. First of all, let me remind you that price volatility(unpredictability) is expressed by duration of a bond. In other words, the greater duration, the higher price volatility is. We are given bonds with 2 characteristics: maturity and coupon rate. So let us examine how each of them affect the price. We know that the greater coupon rate is, the more money we are going to receive earlier, hence the duration is smaller (the price volatility lower). Knowing that, we should pick a bond with smaller coupon rate. Next, we know that the greater maturity of a bond is, the greater duration (higher price volatility)of a bond is. That's logical since there will be more time for bond to be affected by changes of interest rates. Hence, we should pick a bond with greater maturity. So we conclude that, among given bonds, the one with 2% coupon rate and 10 years maturity would have the highest price volatility.

Anyone who still doesn't understand the way we got to the solution should take a look at the Wiki pages related to Modified Duration, Macaulay Duration and Bond's price volatility.