1 (RWJ Essentials 5ed Ch6 P16) [Interest Rate Risk] Both Bond X and Bond Y have 7% coupons, make semiannual payments, and are priced at par value. Bond X has 3 years to maturity, whereas Bond Y has 20 years to maturity. If interest rates suddenly rise by 2%, what is the percentage change in the price of Bond X? of Bond Y? If rates were to suddenly fall by 2% instead, what would the percentage change in the price of Bond X be then? Of Bond Y? * What does this problem tell you about the interest rate risk of longer-term bonds? 2 (RWJ Essentials 5ed Ch6 P17) [Interest Rate Risk] Bond X is a 5% coupon bond. Bond Y is a 11% coupon bond. Both bond have eight years to maturity, make semiannual payments, and have a YTM of 7%. 0 If interest rates suddenly rise by 2%, what is the percentage price change of these bonds? What if rates suddenly fall by 2% instead? 2 What does this problem tell you about the interest rate risk of lower-coupon bonds? a