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Question 10 Bond P is a 4 percent coupon bond; Bond Q is a 12 percent coupon bond. Both bonds have 6 years to maturity,
Question 10 Bond P is a 4 percent coupon bond; Bond Q is a 12 percent coupon bond. Both bonds have 6 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 change in the price of these bonds? What if rates suddenly fall by 2% ? What does this say about the interest rate risk of lower-coupon bonds
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