Both Bond A and Bond B have 8.4 percent coupons and are priced at par...
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Both Bond A and Bond B have 8.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 18 years to maturity. a. If interest rates suddenly rise by 1.2 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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b. If interest rates suddenly fall by 1.2 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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Bond A 5.96% & Bond B 10.16% ( Were marked as INCORRECT)
Bond A 1.91% & Bond B 10.19% ( Were marked as INCORRECT)
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