2. Both Elmers Inc. (EI) and Locktite Corp. (LC) have bonds with a 7% coupon, make...

  

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2. Both Elmers Inc. (EI) and Locktite Corp. (LC) have bonds with a 7% coupon, make semiannual payments, and are priced at par value. The El bonds have 10 years to maturity, whereas the LC bonds have 25 years to maturity. a. If interest rates suddenly rise by 1%, what is the percentage change in the price of the EI bonds? Of the LC bonds? (EI) N = 20 PV= 1000 JTM=8% (LC) b. If rates were to suddenly fall by 1% instead, what would the percentage change in the price of the El bonds be then? Of the LC bonds? 2. Both Elmers Inc. (EI) and Locktite Corp. (LC) have bonds with a 7% coupon, make semiannual payments, and are priced at par value. The El bonds have 10 years to maturity, whereas the LC bonds have 25 years to maturity. a. If interest rates suddenly rise by 1%, what is the percentage change in the price of the EI bonds? Of the LC bonds? (EI) N = 20 PV= 1000 JTM=8% (LC) b. If rates were to suddenly fall by 1% instead, what would the percentage change in the price of the El bonds be then? Of the LC bonds?