12. Noah Kramer, a fixed-income portfolio manager based in the country of Sevista, is considering the purchase of a Sevista government bond. Kramer decides to evaluate two strategies for implementing his investment in Sevista bonds. Table 16A gives the details of the two strategies, and Table 16B contains the assumptions that apply to both strategies.

TABLE 16A Strategy 5-Year Maturity (Modified Duration
4.83)
15-Year Maturity (Modified Duration
14.35)
25-Year Maturity (Modified Duration
23.81)
I $5 million 0 $5 million II 0 $10 million 0 TABLE 16B Market value of bonds $10 million Bond maturities 5 and 25 years or 15 years Bond coupon rates 0.00% (zero coupon)
Target modified duration 15 years TABLE 16C Maturity Interest Rate Change 5 year Down 75 basis points (bps)
15 year Up 25 bps 25 year Up 50 bps Before choosing one of the two bond-investment strategies, Kramer wants to analyze how the market value of the bonds will change if an instantaneous interest rate shift occurs immediately after his investment. The details of the interest rate shift are shown in Table 16C .
Calculate, for the instantaneous interest rate shift shown in Table 16C , the percent change in the market value of the bonds that will occur under each strategy.