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Bonn Corporation has two bonds outstanding. All two have a coupon rate of 12% and a $1,000 par value. Coupon payment is made semiannually. The

Bonn Corporation has two bonds outstanding. All two have a coupon rate of 12% and a $1,000 par value. Coupon payment is made semiannually. The first bond has 2 years left to maturity. The second bond has 5 years to maturity. Assume that the market rate for bonds is 6%.

1. What is the value of each of the bonds? What is the relationship between the price of bond and the maturity?

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