Question
Consider the two bonds described below. Bond A Bond B maturity (years) 15 20 Coupon Rate (%) 10% 6% (Paid semi annually) $1,000 $1,0000 If
Consider the two bonds described below.
Bond A Bond B
maturity (years) 15 20
Coupon Rate (%) 10% 6%
(Paid semi annually) $1,000 $1,0000
If both bonds had a required return of 8%, what would the bonds prices be?
Describe what it means if a bond sells at a discount, a premium, and at its face amount (par value). Are these two bonds selling at a discount, premium or par?
If the required return on the two bonds rose to 10%, what would the bonds prices be?
would like to see the equation how the answer was found so I can learn it. :)
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