Cisco systems

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Reference no: EM133616803

Questions 

1. Rick bought a bond when it was issued by Macroflex Corporation 14 years ago.

The bond, which has a $1,000 face value and a coupon rate equal to 10 percent, matures in six years. Interest is paid every six months; the next interest payment is scheduled for six months from today. If the yield on similar-risk investments is 14 percent, what is the current market value (price) of the bond?

2. Suppose that five years ago Cisco Systems sold a 15-year bond issue that had a $1,000 par value and a 7 percent coupon rate. Interest is paid semiannually.

a. If the going interest rate has risen to 10 percent, at what price would the bonds be selling today?

b. Suppose that the interest rate remained at 10 percent for the next 10 years.

What would happen to the price of the Cisco Systems bonds over time?

Reference no: EM133616803

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