What would happen to the price of the bonds over time

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Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments.

A. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?

B. Suppose that, 2 years after the initial offering, the going interest rate had risen to 12%. At what price would the bonds sell?

C. Suppose, as in part A, that interest rates fell to 6% 2 years after the issue date. Suppose further that the interest rate remained at 6% for the next 8 years. What would happen to the price of the bonds over time?

Reference no: EM13334805

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