Bond j is a 3 coupon bond bond k is 9 coupon bond both have, Financial Management

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Bond j is a 3 coupon bond bond k is 9 coupon bond both have

Bond J is a 3% coupon bond. Bond K is 9% coupon bond. Both have 15 years to maturity, make semi-annual payments, and have a YTM of 6%.

1) If the interest rate suddenly rises by 2%, what is the percentage price change of these bonds?

2) What is rate suddenly fall by 2% instead?

3) What does this problem tell you about interest rate risk of lower -coupon bonds?

All underlying work must be shown please.

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Financial Management: Bond j is a 3 coupon bond bond k is 9 coupon bond both have

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Financial Management: Bond j is a 3 coupon bond bond k is 9 coupon bond both have

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