Question: Problem 7-20 Interest Rate Risk [LO2] Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent.

Problem 7-20 Interest Rate Risk [LO2]

Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 6 percent.

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)


Percentage change in price of Bond J	%
Percentage change in price of Bond K	%

What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)


Percentage change in price of Bond J	%
Percentage change in price of Bond K	%

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