Suppose the Mazda Motor Company sold an issue of bonds with a 15-year maturity, a $1,000 par
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Question:
Suppose the Mazda Motor Company sold an issue of bonds with a 15-year maturity, a $1,000 par value, an 8 percent coupon rate, and semi annual interest payments. 3 years after the bonds were issued, the going rate of interests on bonds such as these fall to 6 percent.
Suppose that the interest rate remains at 6 per cent for the next 8 years. What would happen to the price of Mazda Motor Company bonds over time?
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