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Price of cisco bonds over time

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Reference no: EM132142203

Suppose that 5 years ago Cisco Systems sold a 15-year bond issue that had a $1,000 per value and a 7% coupon rate. Interest is paid semiannually.

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

b. Suppose that the interest rate remained at 10% for the next 10 years. What would happen to the price of Cisco's bonds over time?

Reference no: EM132142203

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