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Both Bond Sam and Bond Dave have 10 % coupons, make semiannual payments , and are priced at par value. Bond Sam has 3 years
Both Bond Sam and Bond Dave have 10 % coupons, make semiannual payments , and are priced at par value. Bond Sam has 3 years to maturity, whereas Bond Dave matures in 16 years. a) If interest rates suddenly rise by 4 % , what is the percentage change in the price of Bond Sam? Re - answer assuming rates suddenly fall by 4 %. b) If interest rates suddenly rise by 4 percent, what is the percenta ge change in the price of Bond D a ve? Re - answer assuming rates suddenly fall by 4 %
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