Buner Corp.’s outstanding bond has the following characteristics: Years to maturity 6.0 Coupon rate of interest 8.0% Face value $1,000 If investors require a rate of return equal to 12 percent on similar risk bonds and interest is paid semiannually, what should be the market price of Buner’s bond?
10-1 Buner Corp.’s outstanding bond has the following characteristics:
Years to maturity 6.0
Coupon rate of interest 8.0%
Face value $1,000
If investors require a
10-4 Suppose that five years ago Cisco Systems sold a 15-year bond issue that had a $1,000 par value and a 7 percent coupon rate. Interest is paid semiannually. a. If the going interest rate has risen to 10 percent, at what price would the bonds be selling today? b. Suppose that the interest rate remained at 10 percent for the next 10 years. What would happen to the price of Cisco’s bonds over time?
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