6. Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000. Suppose that one year later the going market interest rate drops to 6%. What is the new price of the bonds assuming that they now have 19 years to maturity?

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Chapter16: Interest, Rent, And Profit
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6. Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000. Suppose
that one year later the going market interest rate drops to 6%. What is the new price of the
bonds assuming that they now have 19 years to maturity?
Transcribed Image Text:6. Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000. Suppose that one year later the going market interest rate drops to 6%. What is the new price of the bonds assuming that they now have 19 years to maturity?
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