Question
Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to
| Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 16 years to maturity. |
| If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Sam? | |
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| If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Dave? | |
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| If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Sam be then? | |
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| If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Dave be then? | |
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Public Finance
Authors: Harvey S. Rosen
5th Edition
025617329X, 978-0256173291
