Posted: September 13th, 2022

Interest Rate Risk

See question below.  It should take a finance person less then 10 minutes to get this back to me. The first portion of the problem is completed. Please provide the solution for the second part of the problem.  The attached has more details.

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Bond J has a coupon rate of 4.3 percent. Bond S has a coupon rate of 14.3 percent. Both bonds have eleven years to maturity, make semiannual payments, a par value of $1,000, and have a YTM of 9.6 percent.
 
If interest rates suddenly rise by 3 percent, what is the percentage price change of these bonds?

 

 

 

 

If interest rates suddenly fall by 3 percent instead, what is the percentage price change of these bonds?

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