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What would happento the price of the bonds overtime

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Bonds exercises

1. A company issued bonds with 10-year maturity, a $1,000par value, a 10% coupon rate, and semiannual interest payments.

a. Three years after the bonds were issued, the going rate of interest on bonds suchas these fell to 7%. At what price would the bondssell? 

b. Suppose that, 3 years after the initial offering, the going interest rate had risen to11%. At what price would the bondsell?

c. Suppose, as in part a, that interest rate fell to 7% 3 years after the issue date. Suppose further that the interest rate remained at 7% for the next 7 years. What would happento the price of the bonds overtime?

Reference no: EM132389759

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