A company has two bonds outstanding The first matures after five years and has a coupon rate of 8 25 percent The second matures after ten years and has a coupon rate of 8 25 percent Interest rates are currently 10 percent What is the present price of each $1,000 bond Why are these prices different ...

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A company has two bonds outstanding. The first matures after five years and has a coupon rate

Question:

A company has two bonds outstanding. The first matures after five years and has a rate of 8.25 percent. The second matures after ten years and has a rate of 8.25 percent. Interest rates are currently 10 percent. What is the present price of each $1,000 bond? Why are these prices different?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...