Question
XYZ issued a 30 year bond 10 years ago. The coupon payment is 6%. The bond pay semi-annual interest payments and was issued at par
XYZ issued a 30 year bond 10 years ago. The coupon payment is 6%. The bond pay semi-annual interest payments and was issued at par value of $1,000.00 per bond. The Federal Reserve has cut rates to near zero and new comparable bonds to XYZ's are being issued with coupons of 3% now.
How will the change in interest rates effect the coupon payments received by investors?
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Financial Management Theory And Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
3rd Canadian Edition
017658305X, 978-0176583057
