Question content area top

Part $1$

Bond value and changing required returnsBond X has a coupon rate of $11\%,$ and Bond Y pays a $5\%$ annual coupon. Assume that both bonds have a $ $1$ comma $000-$par$-$value. Both bonds have $13$ years to maturity. The yield to maturity for both bonds is now $11\%.$

a$.$If the interest rate rises by $2\%,$ by what percentage will the price of the two bonds change?

b$.$If the interest rate drops by $2\%,$ by what percentage will the price of the two bonds change?

c$.$Which bond has more interest rate risk? Why?

Question content area bottom

Part $1$

a$.$If the interest rate rises by $2\%,$ the price of bond X will change by

enter your response here$\%.($Round the percentage to two decimal places.$)$