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The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of
The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of 10 percent outstanding. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 7 percent. a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. -19.41 % : % Percentage change in price of Faulk Corp. bond Percentage change in price of Gonas Co. bond b. Percentage change in price of Faulk Corp. bond Percentage change in price of Gonas Co. bond 26.05% %
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