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Ilia_Sergeevich [38]
3 years ago
7

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 14 years to maturity, make semiann

ual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Business
1 answer:
beks73 [17]3 years ago
8 0

Answer: -18.80% for bond J, -15.46% for bond K

Explanation:

If interest rates suddenly rise by 2 percent, the percentage price change of bond J is -18.80% while the percentage price change of bond K is -15.46%

The calculation is provided below

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E. have a sinking fund provision

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An  increase in net operating income of $127,200

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Sales ($400 x 400)                                    $160,000

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