One year after the bonds were issued

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Assume that Capital Healthcare sold bonds that have a 10-year maturity, a 9 percent coupon rate with annual payments, and a $1,000 par value.

A. Suppose that one year after the bonds were issued, the required interest rate fell to 6 percent. What would be the bond’s value?

B. Suppose that one year after the bonds were issued, the required interest rate rose to 11 percent. What would be the bond’s value?

C. What would be the value of the bonds three years after issue in each scenario above, assuming that interest rates stayed steady at 6 percent and 11 percent?

Reference no: EM13947290

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