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Suppose there are two bonds from the same firm. Both pay a 5% coupon with 8 years to maturity and have a face value of
Suppose there are two bonds from the same firm. Both pay a 5% coupon with 8 years to maturity and have a face value of $1000. If bond A is a semi-annual bond and bond B is an annual coupon bond, which of the following is correct?
A) The bonds will trade at the same price.
B) The semi-annual coupon bond will trade at a higher price.
C) The annual coupon bond will trade at a higher price.
D) There is not enough information to determine which bond trades at a higher price.
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