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Two firms [A & B] have $1,000 par value bond issues outstanding that have the same maturity [twenty years] & risk. Firm A's bond has an 8 percent annual coupon rate, while Firm B's bond has an 8 percent semiannual coupon rate. If the nominal required rate of return, rd, is 12 percent, semiannual basis, for both bonds, Determine the difference in current market prices of the two bonds?  

(A) .50

(B) 2.20

(C) 17.53

(D) 6.28

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916180

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