Suppose Hillard Manufactu

Suppose Hillard Manufactu

Suppose 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 that 2 years after the issue date (as in part a) interest rates fell to 6%. 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?) A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and ayield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond?sThe Brownstone Corporation?s bonds have 5 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, and the coupon interestrate is 9%.a. What is the yield to maturity at a current market price of (1) $829 or (2) $1,104?b. Would you pay $829 for one of these bonds if you thought that the appropriate rateof interest was 12%?that is, if rd = 12%? Explain your answer.

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