Bond J has a coupon rate of 5.5 percent. Bond S has a coupon rate of 15.5 percen
ID: 2626868 • Letter: B
Question
Bond J has a coupon rate of 5.5 percent. Bond S has a coupon rate of 15.5 percent. Both bonds have eight years to maturity, make semiannual payments, and have a YTM of 12 percent.
If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)
If interest rates suddenly fall by 3 percent instead, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Bond J has a coupon rate of 5.5 percent. Bond S has a coupon rate of 15.5 percent. Both bonds have eight years to maturity, make semiannual payments, and have a YTM of 12 percent.
Explanation / Answer
Requirement 1
Bond J = -15.75%
Bond S = -13.09%
Requirement 2
Bond J = 19.63%
Bond S = 16%