Make semiannual payments and are priced at par value

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Reference no: EM131055321

Both Bond Bill and Bond Ted have 11.8 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 7 years to maturity, whereas Bond Ted has 24 years to maturity.

Requirement 1: If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?

Requirement 2: If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds?

Reference no: EM131055321

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