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What would be the percentage change in price of Bond A

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Reference no: EM132918802

Question - Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 20 years to maturity.

a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B?

b. If interest rates suddenly fall by 2 percent instead, what would be the percentage change in price of Bond A and Bond B?

Reference no: EM132918802

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