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he Corporation plans to issue $5 million of bonds with a coupon rat 8 percent and 30 years to maturity. The coupons are paid semiannually
he Corporation plans to issue $5 million of bonds with a coupon rat 8 percent and 30 years to maturity. The coupons are paid semiannually and the current market interest rate on these bonds is 7 percent. In one year, the interes rate on the bonds will be either 12 percent or 4 percent with equal probability. Assume investors are risk neutral. If the bonds are non-callable, what is the price of the bonds today? a) $1,101.97 b) $1,179.42 Oc) $1,072.74 d) $1,719.24
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