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lnie rast Rete Risk. Both Bond Bill and Bond Ted have 6% coupons, make half-yearly...

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lnie rast Rete Risk. Both Bond Bill and Bond Ted have 6% coupons, make half-yearly payments, have a $1000 face value, and are priced at par value. Bond Bill has four years to maturity, whereas Bond Ted has 25 years to maturity. If interest rates suddenly rise by 3%, what is the percentage change in the price of Bond Bill? Of Bond Ted? If rates were to suddenly fall by 3% instead, what would the percentage change in the price of Bond Bill be then? Of Bond Ted? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer term bonds? LO 6.2

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