Suppose there are two bonds you are considering:

a. If both bonds had a required rate of return of 10%, what would the bonds' prices be?
b. Explain what it means when a bond is selling at a discount, a premium, or at its face amount (par value). Based on results in part (a), would you consider both bonds to be selling at a discount, premium, or at par?
c. Re-calculate the prices of the bonds if the required return falls to 9%.

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Maturity (years) Coupon rate (%) (paid semiannually) Par value Bond A 20 12 $1,000 Bond B 30 8 $1,000