If interest rates suddenly rise by 2 percent what is the


Bond J has a coupon rate of 4 percent and Bond K has a coupon rate of 10 percent. Both bonds have 12 years to maturity, make semiannual payments, and have a Yeild To Maturity of 7 percent.

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

2) What if rates suddenly fall by 2 percent instead?

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Financial Management: If interest rates suddenly rise by 2 percent what is the
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