Bond J is a 5.0 percent coupon bond. Bond S is a 15.0 percent coupon bond. Both bonds have eight years to maturity, make semiannual payments, and have a YTM of 11.0 percent.
Requirement 1:
If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
Requirement 2:
If interest rates suddenly drop by 2 percent, what is the percentage change in the price of these bonds?