The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 5%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 30 years. The market interest rate for similar bonds is 12%. - Attempt 2/2 for 0 pts. What is the price of bond A ? Incorrect We need to calculate the present values of 2 cash flows even though the bond has only 1 year to maturity, since bonds typically pay interest semi-annually. As a result, we also have to adjust the cdiscount rate to half the given market interest rate and find the coupon payment as 1/2$1,000 * coupon rate. PA=1+0.0625+(1+0.06)21,025=935.83 Attempt 1/2 for 5 pts. What is the price of bond B ? Now assume that yields increase to 15%. What is the price of bond A ? What is the price of bond B now