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Both Bond Twain and Bond Brooks have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Twain has 5 years
Both Bond Twain and Bond Brooks have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Twain has 5 years to maturity, whereas Bond Brooks has 10 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Twain? Of Bond Brooks? If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Twain be then? Of Bond Brooks? (6 points)-
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