Both bond A and bond B have 6.6 percent

by | Mar 18, 2020 | Uncategorized

  

Both bond A and bond B have 6.6 percent coupons and are priced at par value. Bond A has 8 years to maturity, while bond B has 15 years to maturity.

a.

If interest rates suddenly rise by 1.2 percent, what is the percentage change in price of bond A and bond B? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
Bond A %
Bond B %
b.

If interest rates suddenly fall by 1.2 percent instead, what would be the percentage change in price of bond A and bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
Bond A %
Bond B %
  

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