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Red Inc. issued 300 10-year bonds each with a face value of $1,000 on January 1, 20X1. The bonds have a coupon rate of 6%
Red Inc. issued 300 10-year bonds each with a face value of $1,000 on January 1, 20X1. The bonds have a coupon rate of 6% and coupons are paid on June 30th and December 31st. When the bonds are issued, the market rate is 7%. Use this information to answer questions (a), (b), and (c). d. Suppose that on July 1, 20X1, the market rate of interest decreased by 1%. Given this change in the market rate, would the interest expense incurred between July 1 and December 31 be higher, lower, or the same as the interest expense had the market rate remained the same (2 points)? O Higher No change in interest expense O Lower
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