Question
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 12 years to maturity. If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Sam?
If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Dave?
If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Sam be then?
If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Dave be then?
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