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Determining the rate of interest on bonds

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Suppose Ford Motor Company sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10 percent coupon rate, and Semiannual interest payments.

A. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6 percent. At what price would the bonds sell?

B. Suppose that, 2 years after the initial offering, the going interest rate had risen to 12 percent. At what price would the bonds sell?

Reference no: EM132505589

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