Suppose Ford sold an issue of bonds with a 15-year maturity, a $1000 per value,...
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Accounting
Suppose Ford sold an issue of bonds with a 15-year maturity, a $1000 per value, a 12% coupon rate, and annual interest payments.
(a) Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 8%. At what price would the bonds sell?
(b) Suppose that, two years after the bonds issue, the bonds would sell for $883.15. What is the going interest rate?
(c) Today, the closing price of the bond is $786.20. What is the current yield?
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