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2 Apr 2019
Consider the two bonds described below:
Bond A
Maturity(years) 15
Coupon rate(%)10
(paid semiannually)
Par Value 1,000
Bond B
Maturity(years) 20
Coupon (%) 6
(paid semiannually)
Par value 1,000
a.If both bonds had a required of 8%,what would the bond's price be?
b.Describe what it means if a bond sells at a discount,at a premium,at its face value (par value).Are these two bonds selling at a discount,premium,or par?
c.If the required return on the two bonds rose to 10%,what would the bond's prices be?
Consider the two bonds described below:
Bond A
Maturity(years) 15
Coupon rate(%)10
(paid semiannually)
Par Value 1,000
Bond B
Maturity(years) 20
Coupon (%) 6
(paid semiannually)
Par value 1,000
a.If both bonds had a required of 8%,what would the bond's price be?
b.Describe what it means if a bond sells at a discount,at a premium,at its face value (par value).Are these two bonds selling at a discount,premium,or par?
c.If the required return on the two bonds rose to 10%,what would the bond's prices be?
Jamar FerryLv2
3 Apr 2019
