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Bond J is a 3% coupon bond. Bond K is 9% coupon bond. Both have 15 years to maturity, make seminannual payments, and have a YTM of 6%.

1) If the interest rate suddenly rise by 2%, what is the percentage price change of these bonds?

2) What is rate suddenly fall by 2% instead?

3) What does this problem tell you about interest rate risk of lower -coupon bonds?

All anderlying work must be shown please.

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Jamar Ferry
Jamar FerryLv2
29 Sep 2019

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