c. How do the interest rate changes affect premium bonds and discount bonds?Bonds, in general, (decrease or increase) in price when interest rates go up. When interest rates decrease, bond prices (decrease or increase) .d. Suppose the bond were to mature in 12 years. What will be the bond’s price if rates in the market (i) decrease to 9.86 percent or (ii) increase to 13.86 percent? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25.)(i)Bond's price if rate decrease to 9.86 percent $ (ii)Bond's price if rate increase to 13.86 percent $ PTODIem 0.29Maryland Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.81 percent. The current market rate for similar securitiesis 11.86 percent.a. What is the current market value of one of these bonds? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g.15.25.)Current market valueb. What will be the bond's price if rates in the market (i) decrease to 9.86 percent or (ii) increase to 13.86 percent? (Round intermediate calculations to 2 decimal places, e.g.1.25 and final answer to 2 decimal places, e.g. 15.25.)(i) Decrease to 9.86 percent(ii) Increase to 13.86 percent

Answer c: When interest rates (Yield to maturity) are greater than the coupon rate, then the bond…

Answered: Suppose the bond were to mature in 12…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 22E

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c. How do the interest rate changes affect premium bonds and discount bonds?

Bonds, in general, (decrease or increase)

in price when interest rates go up. When interest rates decrease, bond prices (decrease or increase)

.

d. Suppose the bond were to mature in 12 years. What will be the bond’s price if rates in the market (i) decrease to 9.86 percent or (ii) increase to 13.86 percent? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25.)

(i)	Bond's price if rate decrease to 9.86 percent		$
(ii)	Bond's price if rate increase to 13.86 percent		$

PTODIem 0.29
Maryland Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.81 percent. The current market rate for similar securities
is 11.86 percent.
a. What is the current market value of one of these bonds? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g.
15.25.)
Current market value
b. What will be the bond's price if rates in the market (i) decrease to 9.86 percent or (ii) increase to 13.86 percent? (Round intermediate calculations to 2 decimal places, e.g.
1.25 and final answer to 2 decimal places, e.g. 15.25.)
(i) Decrease to 9.86 percent
(ii) Increase to 13.86 percent

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