Bond J is a 5 percent coupon bond. Bond K is an 11 percent coupon bond. Both

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Bond J is a 5 percent coupon bond. Bond K is an 11 percent coupon bond. Both bonds have 8 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?

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Fundamentals Of Corporate Finance

ISBN: 9780072553079

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

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