If interest rates suddenly rise by 2 percent what is the


1. King Farm Manufacturing Company’s common stock has a beta of 1.57. If the risk-free rate is 3.52 percent, and the market return is 9.90 percent, calculate the required return on King Farm Manufacturing’s common stock.

2. Bond J has a coupon rate of 7 percent and Bond K has a coupon rate of 13 percent. Both bonds have 20 years to maturity, make semiannual payments, and have a YTM of 10 percent.

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

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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