Bond J has a coupon rate of 7 percent and Bond K has a coupon rate of 13 percent. Both bonds have 16 years to maturity, make semiannual payments, and have a YTM of 10 percent.
If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?
Percentage change in price of Bond J?
Percentage change in price of Bond K?
What if rates suddenly fall by 2 percent instead?
Percentage change in price of Bond J?
Percentage change in price of Bond K?