Question - What is the percentage change in the price of the bonds if interest rates suddenly rise by 5%?
Airline 1, Inc.
Coupon rate =7%
Settlement date 1/1/2000
Maturity date 1/1/2002
Face value =1,000
# of coupons per year =2
Airline 2, Inc.
Coupon rate =7%
Settlement date 1/1/2000
Maturity date 1/1/2015
Face value =1,000
# of coupons per year =2
Change in interest rate =5%