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Interest Rate Risk Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 1
Interest Rate RiskBond J has a coupon rate of percent. Bond K has acoupon rate of percent. Both bonds have years to maturity, make semiannualpayments and have a YTM of percent. If interest rates suddenly rise by percent,what is the percentage price change of these bonds? What if rates suddenly fall by percent instead? What does this problem tell you about the interest rate risk of lowercoupon bonds?
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