Question
Both Bond Sam and Bond Dave have 11.6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 6 years to
Both Bond Sam and Bond Dave have 11.6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 6 years to maturity, whereas Bond Dave has 23 years to maturity. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Sam and Bond Dave? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) Percentage change in price of Bond Sam ____ % Percentage change in price of Bond Dave ____ % If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave? (Round your answers to 2 decimal places. (e.g., 32.16)) Percentage change in price of Bond Sam ____ % Percentage change in price of Bond Dave ____ %
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