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Management Studies

Laurel Inc and Hardy Corp both have 8% coupon bonds outstanding, with semiannual interest payments and both are priced at par value. The Laurel Inc bond has 2 years to maturity, whereas the Hardy Corp bond had 5 years to maturity. If interest rates suddenly rise by 2%, what is the percentage change in the price of these bonds? If the interest rates were to suddenly fall by 2%, what would the percentage change in the price of these bonds be then? What does this problem tell you about the interest rate risk of longer-term bonds

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9395502

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