Question

The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of 10 percent outstanding. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 7 percent.

If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Faulk Corp. bond	%
Percentage change in price of Gonas Co. bond	%

What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Faulk Corp. bond	%
Percentage change in price of Gonas Co. bond	%

Answer 1