(Solution) - Suppose Windsor Systems sold an issue of bonds with a -(2025 Original AI-Free Solution)

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Suppose Windsor Systems sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 7% coupon rate, and semiannual interest payments.
a. Four years after the bonds were issued, the going rate of interest on bonds such as these
fell to 5%. At what price would the bonds sell?
b. Suppose that, 4 years after the initial offering, the going interest rate had risen to 9%. At what price would the bonds sell?
c. Suppose that the conditions in part a existed-that is, interest rates fell to 5% 4 years after the issue date. Suppose further that the interest rate remained at 5% for the next 6 years. What would happen to the price of the bonds over time?