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4. Bond J is a 4 percent coupon bond. Bond K is a 8 percent coupon bond. Both bonds have 10 years to maturity, make

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4. Bond J is a 4 percent coupon bond. Bond K is a 8 percent coupon bond. Both bonds have 10 years to maturity, make semiannual payments, face value of 1,000 , and have a YTM of 6 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? (20 points)

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