Lady Products, Inc. just issued 10-year, 8% coupon bonds at par. Outstanding bonds of Limbaugh Corp. Lady's
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Question:
Lady Products, Inc. just issued 10-year, 8% coupon bonds at par. Outstanding bonds of Limbaugh Corp. Lady's closest competitor, have a maturity of 10 years and are viewed by investors as being of about the same risk as the Lady bonds, but carry a 5% coupon. Assume market interest rates rise by five percentage points. The value of the ______ bonds will fall by $_____ more than the bonds of their competitor. (Assume all bonds pay interest annually.)
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