Market Yield Rates and Bond Values

Field & Company issued $100 million maturity value of eight-year bonds, which carried a coupon rate of five percent, with interest paid semiannually. At the time of the debt offering, equivalent risk-rated bonds were yielding six percent.

One year after the eight-year bond offering, yield rates had fallen to four percent; but, by the second anniversary of the bond sale, the yield rate on similarly risk-rated debt instruments had risen to eight percent.

Calculate the proceeds from the sale of the five percent, eight-year bonds. Round your answer to the nearest dollar.

$.

Calculate the book value of the bonds after one year and after two years. Round answers to the nearest dollar.

Year 1
Year 2

Calculate the market value of the bonds after one year and after two years. Round your answers to the nearest dollar.

Year 1
Year 2

What is the relationship between market yield rates and bond values?

Inversely or Positively Correlated