Interest Rate Risk Bond J is a 4 per cent coupon bond.

Bond K is a 12 per cent coupon bond. Both bonds have 9 years to maturity, make semi-annual payments, and have a YTM of 8 per cent. The par value of the bonds is £1,000.

If interest rates suddenly rise by 2 per cent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 per cent instead? What does this problem tell you about the interest rate risk of lowercoupon bonds?