Intro

General Electric has two bonds outstanding. Both issues have the same credit rating, a

face value of $$1,000$ and a coupon rate of $3\%.$ Coupons are paid twice a year. Bond $A$

matures in $1$ year, while bond $B$ matures in $23$ years.

The market interest rate for similar bonds is $7\%.$

Part $1$

By how much will the price of bond A fall if yields increase to $10\%$ immediately?

Para

By how much will the price of bond $B$ fall if yields increase to $10\%$ immediately $($in

absolute dollars$)?$