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problem: Corp Inc. has 2 different bonds currently outstanding. Bond A has a face value of $40,000 and matures in twenty years. The bond makes no payments for the first six years, pays $2,000 semiannually for the subsequent eight years and finally pays $2,500 semiannually for the last six years. Bond B also has a face value of $40,000 and matures in twenty years. However, it makes no coupon payments over the life of the bond. If the stated annual interest rate is 12 percent, compounded semiannually,

[A] Determine the price of Bond A?

[B] Determine the price of Bond B?

Basic Finance, Finance

  • Category:- Basic Finance
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