Problem 7-3

Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 5 years to maturity, whereas Bond Dave has 16 years to maturity. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Sam? O 11.87% 0 -11.56% 0 -11.58% 0-13.10% If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Dave? 0 -31.07% 0-23.70% 0-23.68% O 26.04% If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Sam be then? O 13.45% O-11.53% O 13.47% O 11.87% If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Dave be then? O 35.18% O 35.20% 0-23.65% O 26.04%