Question
1. The Faulk Corp. has a 5 percent coupon bond outstanding. The Gonas Company has a 11 percent bond outstanding. Both bonds have 19 years
1.
| The Faulk Corp. has a 5 percent coupon bond outstanding. The Gonas Company has a 11 percent bond outstanding. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 8 percent. |
| If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
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| Percentage change in price of Faulk | % |
| Percentage change in price of Gonas | % |
2.
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What if interest rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
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| Percentage change in price of Faulk | % |
| Percentage change in price of Gonas | % |
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