7. Both bond X and bond Y have 5.8% coupons, make semi annual payments, and are priced at par value. Bond X has five years to maturity, whereas Bon Y has 25 years to maturity. If interest rates suddenly rise by 2%, what is the percentage change in the price of bond X? Of bond Y? Both bonds have a par value of $1000. If rates were suddenly to fall by 2% instead, what would the percentage change in the price of bond X be then? Of bond Y? Illustrate your answer by graphing the bond prices versus yield to maturity. What does this problem tell you about interest rate risk of longer term bonds? 7. Both bond X and bond Y have 5.8% coupons, make semi annual payments, and are priced at par value. Bond X has five years to maturity, whereas Bon Y has 25 years to maturity. If interest rates suddenly rise by 2%, what is the percentage change in the price of bond X? Of bond Y? Both bonds have a par value of $1000. If rates were suddenly to fall by 2% instead, what would the percentage change in the price of bond X be then? Of bond Y? Illustrate your answer by graphing the bond prices versus yield to maturity. What does this problem tell you about interest rate risk of longer term bonds