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# Company X sold an issue of bonds with a 20 year maturity, a \$1000 pa

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Company X sold an issue of bonds with a 20-year maturity,
a \$1000 par value, an 8% coupon rate, and annual interest
payments. 8 years after issue, the going rate of interest on
comparable bonds rose to 10%. At what price would the
bonds sell?
Solution
Interest Rates has an inverserelationship with bond price
so
if interest rate rose to 10 % then the price will be,
1000*8% = 80
80/10% = 800
Bond Price would be 800

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Company X sold an issue of bonds with a 20 -year maturity, a \$1000 par value, an 8% coupon rate, and annual interest payments. 8 years after issue, the going rate of interest on comparable bonds rose to 10%. At what price would the bonds sell? Solution Interest Rates has an inverserelationship wit ...
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