Question
Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, $1,000 par value, a 10% coupon rate, and semi-annual interest payments. a. Two
Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, $1,000 par value, a 10% coupon rate, and semi-annual interest payments. a. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell? b. Suppose that 2 years after the initial offerings, the going interest rate had risen to 12%. At what price would the bonds sell? c. Suppose that 2 years after the issue date (as in part a) interest rates fell to 6% for the next 8 years. What would happen to the price of the bonds over time?please answer the question manually (no excel use)
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