Laurel, Inc., and Hardy Corp. both have 6 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 18 years to maturity.
A. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
B. If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then?
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Home » Business » Laurel, Inc., and Hardy Corp. both have 6 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp.