Question
The Grimm Corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes
"The Grimm Corporation has two different 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 $800 every six months over the subsequent 8 years, and finally pays $1,000 every six months over the last 6 years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 5.3 percent compounded semiannually, what is the current price of Bond M? Of Bond N?"
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