What would the percentage change in price of bond dave be

Reference no: EM13262232

Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 2 years to maturity, whereas Bond Dave has 18 years to maturity.

(a) If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam?

(b) If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Dave be then?

Reference no: EM13262232

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