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Bond A and Bond B are issued by the same firm with the same credit rating. You believe they should share the same discount rate
Bond A and Bond B are issued by the same firm with the same credit rating. You believe they should share the same discount rate (YTM). Bond A pays semi-annual coupons at annual coupon rate of 8%, 4 years to maturity. Bond B pays semi-annual coupons at annual coupon rate of 10%, 5 years to maturity. Bond B is quoted at 120. How much should A be quoted at? 135 91 109 121
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