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What happens to the price of the newly issued bonds

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Reference no: EM132564326

Question 1: Suppose our firm decides to issue 15-year bonds with a par value of $1,500 and semi-annual coupon payments. We still offer a 10% coupon interest rate, but immediately after issue interest rates rise to 12%. What happens to the price of these newly issued bonds?

Question 2: NBN preference shares pay a $12.5 dividend per year. If our required rate of return on NBN preference shares is 7.5%, what would we consider a fair price for these shares?

Reference no: EM132564326

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