Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments,...

Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has six years to maturity, whereas the Hardy Corp. bond has 19 years to maturity.

If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)


Percentage change in price of Laurel, Inc., bond	%
Percentage change in price of Hardy Corp. bond	%

If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of each bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)


Percentage change in price of Laurel, Inc., bond	%
Percentage change in price of Hardy Corp. bond	%

Expert Solution

jeff jeffy answered 2 years ago

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Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments,...

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