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Interest Rate Risk Bond J has a coupon rate of 4 percent. Bond K has a coupon rate of 14 percent. Both bonds have 17
Interest Rate Risk
Bond J has a coupon rate of 4 percent. Bond K has a coupon rate of 14 percent.
Both bonds have 17 years to maturity, a par value of $1,000, and a YTM of 8 percent, and both make semiannual payments.
If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?
What if rates suddenly fall by 2 percent instead?
What does this problem tell you about the interest rate risk of lower-coupon bonds?
I need excel solution for these questions.
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