Interest Rate Risk. Bond J is a 4 percent coupon bond . Bond S is a 14 percent coupon bond. Both bonds have eight years to maturity, make semiannual payments. and have a YTM of 9 percent. If interest rates suddenly rise by 2 percent , what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?
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