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What is the new price of the bonds

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Problem - Last year, a firm issued 30-year, 8% annual coupon bonds at a par value of $1,000.

(1) Suppose that 1 year later the going rate drops to 6%. What is the new price of the bonds, assuming that they now have 29 years to maturity?

(2) Suppose instead that 1 year after issue, the going interest rate increases to 10% (rather than dropping to 6%). What is the price?

Reference no: EM132726701

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