Suppose the Ford Motor Company sold an issue of bonds with a 10-year maturity, a $1000 par value, a 10 per cent 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 per cent. At what price would the bonds sell?

b. Suppose that the interest rate remained at 6 per cent for the next eight years. What would happen to the price of the Ford Motor Company bonds over time?