Question

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?

1.Percentage change in price of Bond _______ J%

2.Percentage change in price of Bond_______ K%

What if rates suddenly fall by 2 percent instead? 3.Percentage change in price of Bond _______ J% 4.Percentage change in price of Bond _______ K%

Answer 1