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The Smith Company has two different bonds currently outstanding .Bond A has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and finally pays $1000 every six months. Bond B also has a face value of $30,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond .If the required return on both these bonds is 8 percent compounded semi-annually, what should be the current price of Bond A? Of Bond B?

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Financial Management, Finance

Category:- Financial Management
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