Question
Jallouk Corporation has two differnt bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no
Jallouk Corporation has two differnt bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first 6 years, then pays $1,100 every six months over the subsequent eight years, and finally pays $1,400 every six months over the last 6 years. Bond N also has a face balue of $20,000 and a maturaty of 20 years: it makes no coupon payments over the life of the bond. If the required return on both these bonds is 5.6 percent compounded semiannually, what is the current price of the M? Of bond N?
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