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If interest rates suddenly rise by 2 percent what is the

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Both Bond Bill and Bond Ted have 9.8 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 7 years to maturity, whereas Bond Ted has 24 years to maturity.

Requirement:

If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?

Requirement:

If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds?

Reference no: EM13566892

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