Bond j has a coupon rate of 5 percent and bond k has a, Ask an Expert

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Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 8 percent.

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts 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.)

Percentage change in price of Bond J = ___%

Percentage change in price of Bond K = ___%

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.)

Percentage change in price of Bond J = ___%

Percentage change in price of Bond K = ___ %

Other answers previously posted are incorrect.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91751720

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