The faulk corp has a 6 percent coupon bond outstanding the, Ask an Expert

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The Faulk Corp. has a 6 percent coupon bond outstanding. The Gonas Company has a 12 percent bond outstanding. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 9 percent.

a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer 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 Faulk =

Percentage change in price of Gonas =

b. What if interest 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 Faulk =

Percentage change in price of Gonas =

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Financial Management, Finance

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