Response to the following :
Referring to Problem, at what price would the bond sell if bonds were paying 8% interest compounded annually? Compare your answer to your answer to the preceding problem.
Problem :
A corporate bond can be converted to $1000 at maturity eight years from purchase. If the bonds are to be competitive with other bonds, which pay 6% interest compounded annually, at what price will the corporate bonds sell, assuming they make no cash payments prior to maturity?