Both bond sam and bond dave have 10 percent coupons make, Ask an Expert

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Both Bond Sam and Bond Dave have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 2 years to maturity, whereas Bond Dave has 19 years to maturity. (Do not round your intermediate calculations.)

Requirement 1:

(a) If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam?

(b) If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Dave?

Requirement 2:

(a) If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Sam be then?

(b) If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Dave be then?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92718606

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