The Faulk Corp. has a 6 percent coupon bond outstanding. The Gonas Company has a 12 percent bond outstanding. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 9 percent.
a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Percentage change in price of Faulk =
Percentage change in price of Gonas =
b. What if interest rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Percentage change in price of Faulk =
Percentage change in price of Gonas =