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Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 10 percent. Both bonds have 9 years to
Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 10 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond J? O -30.33% O -30.35% O-28.35% -29.35% If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond K? O-23.56% O-25.56% O 39.61% O-25.54% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond J? O-48.72% O 46.97% O 46.95% O -30.37% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond K? O-9.83% O 38.12% O 38.24% O-25.58%
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To calculate the percentage price change of a bond when interest rates change you can use the modified duration concept The formula to calculate the a...Get Instant Access to Expert-Tailored Solutions
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