Description of this paper

Suppose Ford Motor Co. sold an issue of bonds wit...

Description

Solution


Question

Suppose Ford Motor Co. sold an issue of bonds with a 10-year maturity, $1,000 par value, and 10% coupon rate. Two years after the bonds were issued, the going rate of interest on similar bonds fell to 6%. At what price would the bonds sell? Instead of an interest rate decrease, suppose two years after issuance, the going interest on similar bonds rose to 12%. At what price would the bonds sell?

 

Paper#5308 | Written in 18-Jul-2015

Price : $25
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