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Comparing Bonds: Both Bond A and Bond B have 7.1 percent coupons, make semiannual payments, and are priced at par value. Bond A has three

Comparing Bonds:

Both Bond A and Bond B have 7.1 percent coupons, make semiannual payments, and are priced at par value. Bond A has three years to maturity, whereas Bond B has 20 years to maturity.

a) If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond A and Bond B?

b) If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond A and Bond B?

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