Question
Both bond A and bond B have 6.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while bond
Both bond A and bond B have 6.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while bond B has 15 years to maturity.
a) | Assume if interest rates suddenly rise by 1.2 percent, what is the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Negative answers should be indicated by a minus sign. Omit the "%" sign in your response.) |
Bond A | % |
Bond B | % |
b) | Assume if interest rates suddenly fall by 1.2 percent instead, what would the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Bond A | % |
Bond B | % |
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