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Suppose Ford sold an issue of bonds with a 15-year maturity, a $1,000 par value, a 12% coupon rate, and semiannual interest payments. (a) Two
Suppose Ford sold an issue of bonds with a 15-year maturity, a $1,000 par value, a 12% coupon rate, and semiannual interest payments. (a) Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 9%. At what price would the bonds sell? (b) Suppose that, two years after the bonds'issue, the going interest rate had risen to 13%. At what price would the bonds sell? (c) Today, the closing price of the bond is $783.58. What is the current yield?
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