Bailey Manufacturing issued a 12-year maturity $1,000 par value, an 11% coupon rate, and semiannual interest payments. (15)

Three years after the bonds were issued, the going rate of interest on bonds such as these fell to 7%. At what price would the bonds now sell?

Now assume that three years after the bonds were issued the going rate of interest on bonds such as these rose to 13%. At what price would the bonds now sell?

Suppose that the conditions in part a existed -- three years after the issue date, interest rates fell to 7%. Suppose further that the interest rate remained at 7% for the next 9 years. What would happen to the price of the bonds over time?