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Suppose Turner Enterprises sold an issue of bonds with the following original maturity (n), par value (M), coupon rate, and semiannual interest payments. Two years
Suppose Turner Enterprises sold an issue of bonds with the following original maturity (n), par value (M), coupon rate, and semiannual interest payments. Two years after the bonds were issued, the going rate of interest on bonds such as these rose to 14%. At what price would the bonds sell? At what price would the bonds sell if the interest rate had fallen to 9%? | |||||||
INPUT DATA | n | 10 | m | 2 | year | 2 | |
Par | $1,000 | rd2a | 14.00% | rd2b | 9.00% | coupon rate | 12.07% |
B2 |
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