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Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual Interest payments, and both are priced at par value. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If Interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel -7.71 % Percentage change in price of Hardy 15.38 % If Interest rates were to suddenly fall by 2 percent Instead, what would the percentage change in the price of these bonds be then? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel 8.58% Percentage change in price of Hardy 14.47%

Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual Interest payments, and both are priced at par value. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If Interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel -7.71 % Percentage change in price of Hardy 15.38 % If Interest rates were to suddenly fall by 2 percent Instead, what would the percentage change in the price of these bonds be then? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel 8.58% Percentage change in price of Hardy 14.47%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual Interest payments, and both are priced at par value. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If Interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel -7.71 % Percentage change in price of Hardy 15.38 % If Interest rates were to suddenly fall by 2 percent Instead, what would the percentage change in the price of these bonds be then? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel 8.58% Percentage change in price of Hardy 14.47%
Transcribed Image Text:Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual Interest payments, and both are priced at par value. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If Interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel -7.71 % Percentage change in price of Hardy 15.38 % If Interest rates were to suddenly fall by 2 percent Instead, what would the percentage change in the price of these bonds be then? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Percentage change in price of Laurel 8.58% Percentage change in price of Hardy 14.47%
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