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Laurel Inc and Hardy Corp both have 8 percent coupon bonds outstanding with semiannual interest payments and both are currently priced at the par value
Laurel Inc and Hardy Corp both have 8 percent coupon bonds outstanding with semiannual interest payments and both are currently priced at the par value of $1000. The Laurel Inc bond has four years to maturity, whereas the Hardy Corp bond has 17 years of maturity.
A) a. If interest rates suddenly rise by 2 percent what is the percentage change in the price of each bond?
B) If rates suddenly fall by 2 percent instead what would be the percentage change in the price of each bond?
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