Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 12 years to maturity
a) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Sam?
b) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Dave?
a) If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Sam be then?
b) If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Dave be then?