Problem:
Both Bond Bill and Bond Ted have 10.6 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 6 years to maturity, whereas Bond Ted has 23 years to maturity.
Requirement:
Question 1: If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
Question 2: If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds?
Note: Please show guided help with steps and answer.