Both Bond A and Bond B have 8.8 percent coupons and are priced at par value....

Both Bond A and Bond B have 8.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 18 years to maturity.

a. If interest rates suddenly rise by 1.4 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

	%Δ in Price
Bond A		%
Bond B		%

b. If interest rates suddenly fall by 1.4 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

	%Δ in Price
Bond A		%
Bond B		%

Expert Solution

jeff jeffy answered 1 year ago

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