BOND Exercise 1 A company has two bond issues outstanding. Both bonds pay $100 annual Interest and $1,000 at maturity. Bond L has a maturity of 15 years; Bonds S has a maturity of 1 year. Calculate the value of the two bonds under the following market interest rates: a) When the going rate of interest is 5%? b) When the going rate of interest is 8%? c) When the going rate of interest is 12%? n Bond L 15 yrs 5%, 8%, 12% 100 1,000 Bonds 1 yr 5%, 8%, 12% 100 1,000 pmt FV PV = PV = a) 5% b) 8% c) 12% BOND Exercise 2 A firm sells an issue of $1,000 face value bonds due in 10 years with a 10% coupon rate and annual payments. The market rate for bonds of this type is 9.95%. A. At what price will the bond sell? B. Two years later, market rates for this type of bond have fallen to 7%. At what price will the bonds sell? C. Suppose instead, that two years later, market rates had risen to 11%. At what price would the bonds sell