Question: For fixed-rate bonds it's important to realize that the value of the bond has a(n)-Select relationship to the level of interest rates. If interest rates

For fixed-rate bonds it's important to realize that the value of

For fixed-rate bonds it's important to realize that the value of the bond has a(n)-Select relationship to the level of interest rates. If interest rates rise, then the value of the bond-select- however, if interest rates fall, then the value of the bond-select- -A-Select- | bond is one that sells below its par value. This situation occurs whenever the going rate of interest is above the coupon rate. Over time its value will -Select-approaching its maturity value at maturity. A -Select-bond is one that sells above its par value. This situation occurs whenever the going rate of interest is below the coupon rate. Over time its value will -Select- approaching its maturity value at maturity. A par value bond is one that sells at par; the bond's coupon rate is equal to the going rate of interest. Normally, the coupon rate is set at the going market rate the day a bond is issued so it sells at par initially Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 7%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 796, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations

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