Question
Laurel Inc. and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel
Laurel Inc. and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel Inc. bond has 6 years to maturity, whereas the Hardy Corp. bond has 19 years to maturity. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)
If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (Negative answers should be indicated by a minus sign.)
| Percentage change in price of Laurel | % |
| Percentage change in price of Hardy | % |
If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then?
| Percentage change in price of Laurel | % |
| Percentage change in price of Hardy | % |
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Contemporary Issues In Finance
Authors: Simon Grima, Frank Bezzina, Inna Romanova
1st Edition
1786359073, 978-1786359070
