Question: Interest Rate Risk Problem: Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds

Interest Rate Risk Problem: Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?

Percentage change in price of Bond J____%

Percentage change in price of Bond K_____ %

What if rates suddenly fall by 2 percent instead?

Percentage change in price of Bond J ______%

Percentage change in price of Bond _______K %

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