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Suppose that five years ago MRT Limited sold a 20 -year bond issue that had a $1000 par value and a 7 percent coupon rate.
Suppose that five years ago MRT Limited sold a 20 -year bond issue that had a $1000 par value and a 7 percent coupon rate. Interest is paid semiannually.
- If the going interest rate has risen to 10 percent, at what price would the bonds sell today? (1.5 Marks)
- Suppose that the interest rate remained at 10 percent for the next 15 years. What would happen to the price of the MRT Limited bonds over time? (2 Marks)
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Market Liquidity Theory Evidence And Policy
Authors: Thierry Foucault, Marco Pagano, Ailsa Roell
1st Edition
0199936242, 978-0199936243
