Question
Both bond A and bond B have 9.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while bond
| Both bond A and bond B have 9.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while bond B has 20 years to maturity. |
| a. | If interest rates suddenly rise by 2.4 percent, what is the percentage change in price of bond A andbond B?(Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Bond A | % |
| Bond B | % |
| b. | If interest rates suddenly fall by 2.4 percent instead, what would be the percentage change in price of bond A and bond B?(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Bond A | % |
| Bond B | % |
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Financial Management Principles and Applications
Authors: Sheridan Titman, Arthur Keown, John Martin
12th edition
978-0133423822
