What would be the percentage change in the price of bonds

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Reference no: EM131947328

Question: Both Bond Bill and Bond Ted have 9.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000.

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

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

Reference no: EM131947328

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