Last year a firm issued 10-year, 10% annual coupon bonds at a par value of $1,000. Suppose that one year later the going rate drops to 4%. What is the new price of the bonds, assuming that they now have 9 years to maturity?
Suppose instead that one year after issue the going interest rate increases to 15%. What is the price?

Answer rating: 100% (QA)

Bond Price when Interest Rate Decreases Original bond issue 10year 10 coupon bonds with par value of ... View the full answer