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Bond A and Bond B both have a par value of $1000 and have 20 years to maturity. Bond A has a 10% coupon rate
- Bond A and Bond B both have a par value of $1000 and have 20 years to maturity. Bond A has a 10% coupon rate with a semiannual coupon payment and is priced at $1,100. Bond B has an 8% coupon rate with a semi-annual coupon payment. Both bonds have the same level of risk.
- What is the price of Bond B?
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Step: 1
To calculate the price of Bond B we need to use the bond pricing formula which is Bond price C 1 r1 ...
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Corporate Finance Core Principles And Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
6th Edition
1260571122, 978-1260571127
