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XYZ Corp. has two different bonds currently outstanding. Bond A has a face value of $10,000 and matures in 15 years. The bond makes no
XYZ Corp. has two different bonds currently outstanding. Bond A has a face value of $10,000 and matures in 15 years. The bond makes no payments for the first 5 years, then pays $1,000 every six months over the subsequent 5 years, and finally pays $1,300 every six months over the last 5 years. Bond B also has a face value of $10,000 and a maturity of 15 years; it makes no coupon payments over the life of the bonds. If the required return on both bonds is 12 percent compounded semiannually, what is the current price of Bond A and Bond B?
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