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Interest Rate Risk [LO2] Bond J is a 4 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have nine years
Interest Rate Risk [LO2] Bond J is a 4 percent coupon bond. Bond K is a
12 percent coupon bond. Both bonds have nine years to maturity, make semiannual payments, and have a YTM of 8 percent. 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?
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