Question

Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 11 years to maturity. (Do not round your intermediate calculations.)

   

Requirement 1:

(a)	If interest rates suddenly rise by 5 percent, what is the percentage change in the price of Bond Sam?
	(Click to select)19.15%-15.52%-18.38%-15.50%16.06%

    

(b)	If interest rates suddenly rise by 5 percent, what is the percentage change in the price of Bond Dave?
	(Click to select)-43.07%49.17%-30.10%32.95%-30.08%

    

Requirement 2:

(a)	If rates were to suddenly fall by 5 percent instead, what would the percentage change in the price of Bond Sam be then?
	(Click to select)19.13%16.06%-15.47%19.11%19.18%

    

(b)	If rates were to suddenly fall by 5 percent instead, what would the percentage change in the price of Bond Dave be then?

Answer 1