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Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent.  Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 6 percent.  If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?

1. Percentage change in price of Bond J? ______%

2. Percentage change in price of Bond K?______%

What if rates suddenly fall by 2 percent instead?

3. Percentage change in price of Bond J? _______%

4. Percentage change in price of Bond K? _______%

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Ronaldo Mendoza
Ronaldo MendozaLv10
23 Jan 2021

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