Question

The Faulk Corp. has a bond with a coupon rate of 3 percent outstanding. The Yoo Company has a bond with a coupon rate of 9 percent outstanding. Both bonds have 17 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 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.)

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.)

Answer 1