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Two companies APPLE and BANANA have issued coupon bonds that are perceived to carry identical risk; similar bonds are currently yielding 14%. The APPLE bond

Two companies APPLE and BANANA have issued coupon bonds that are perceived to carry identical risk; similar bonds are currently yielding 14%. The APPLE bond has a coupon rate of 12 percent (interest payable annually), 8 years remaining to maturity and a face value of $1000. The BANANA bond currently sells for $844.47, has annual interest payments, a face value of $1000 and 6 years remaining to maturity.
Determine a fair price for the APPLE bond.
Calculate the coupon rate for the BANANA bond.

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