Question

Suppose Dillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 face 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? Suppose that further that the interest rate remained at 6% for the next 8 years. What would happen to the price of the bonds over time? Explain after the issue date (as in part a) interest rates fell to 6%. Suppose

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