Question
Interest Rate Risk. Bond J is a 5% coupon bond. Bond K is an 10% coupon bond. Both bonds have 12 years to maturity, make
Interest Rate Risk. Bond J is a 5% coupon bond. Bond K is an 10% coupon bond. Both bonds have 12 years to maturity, make semiannual payments, and have an YTM of 5.00%. 9a. If interest rates suddenly change (rise) by 4.00% (YTM is now 9.00%), the percentage price change of bond J is _______%. 9a. Points: 5.0 9b. If interest rates suddenly change (rise) by 4.00% (YTM is now 9.00%), the percentage price change of bond K is _______%. 9b. Points: 5.0 9c. If interest rates suddenly change (fall) by -4.00% (YTM is now 1.00%), the percentage price change of bond J is _______%. 9c. Points: 5.0 9d. If interest rates suddenly change (fall) by -4.00% (YTM is now 1.00%), the percentage price change of bond K is _______%. 9d. Points: 5.0
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