Problems

$11\mathrm{.}1.$ Assume Venture Healthcare sold bonds that had a ten$-$year

maturity, a $12$ percent coupon rate with annual payments, and a

$$1,000$ par value.

a$.$ Suppose that two years after the bonds were issued, the required

interest rate fell to $7$ percent. What would be the bonds' value?

b$.$ Suppose that two years after the bonds were issued, the required

interest rate rose to $13$ percent. What would be the bonds'

value?

c$.$ What would be the value of the bonds three years after issue in

each scenario above, assuming that interest rates stayed steady at

either $7$ percent or $13$ percent?