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What is the percentage change in the price of these bands

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Question - Both Bond Bill and Bond Ted have 10.8 percent coupons, make semiannual payments, and are priced at par value. Bend Bill has 7 years to maturity, whereas Bond Ted has 24 years to maturity. Both bonds have a par value of 1,000.

a. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bands?

b. If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds?

Reference no: EM133189785

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