Question

Bond J has a coupon rate of 5 percent. Bond K has a coupon rate of 9 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent.

If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond J? -23.65% -21.67% -22.67% -23.67%

If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond K? 31.98% -21.57% -19.59% -21.59%

If interest rates suddenly fall by 4 percent, what is the percentage price change of Bond J? 33.25% -33.74% 33.23% -23.69%

If interest rates suddenly fall by 4 percent, what is the percentage price change of Bond K? -21.61% 29.89% -10.25% 29.77%

Answer 1