Suppose Ford sold an issue of bonds with a 17-year maturity, a $1500 par value, a...
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Suppose Ford sold an issue of bonds with a 17-year maturity, a $1500 par value, a 12% coupon rate, and semiannual interest payments (which are determined by half of the coupon rate). Please use the factor formulae to solve the questions below: (a) Two years after the bonds were issued (after the 4th coupon amount payments), the going rate of interest on bonds such as these fell to 7% (compounded semi-annually). At what price would the bonds sell? Sell price = $ (keep 2 decimal places) (b) Suppose that, two years after the bonds' issue (after the 4th coupon amount payments), the going interest rate had risen to 15% (compounded semi-annually). At what price would the bonds sell? Sell price = $ (keep 2 decimal places) Suppose Ford sold an issue of bonds with a 17-year maturity, a $1500 par value, a 12% coupon rate, and semiannual interest payments (which are determined by half of the coupon rate). Please use the factor formulae to solve the questions below: (a) Two years after the bonds were issued (after the 4th coupon amount payments), the going rate of interest on bonds such as these fell to 7% (compounded semi-annually). At what price would the bonds sell? Sell price = $ (keep 2 decimal places) (b) Suppose that, two years after the bonds' issue (after the 4th coupon amount payments), the going interest rate had risen to 15% (compounded semi-annually). At what price would the bonds sell? Sell price = $ (keep 2 decimal places)
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