If rates were to suddenly fall by 2 percent instead what, Financial Management

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If rates were to suddenly fall by 2 percent instead what

Interest Rate Risk

Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to maturity.

If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave?

Percentage change in price of Bond Sam ? (8.11% IS INCORRECT)

Percentage change in price of Bond Dave is -18.9 %

If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave?

Percentage change in price of Bond Sam is 8.98 %

Percentage change in price of Bond Dave is 25.48 %

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Financial Management: If rates were to suddenly fall by 2 percent instead what

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