Consider the two bonds described below:

a. If both bonds had a required return of 8%, what would the bonds’ prices be?
b. Describe what it means if a bond sells at a discount, a premium, and at its face amount (par value). Are these two bonds selling at a discount, premium, or par?
c. If the required return on the two bonds rose to 10%, what would the bonds’ pricesbe?

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Bond A 15 10 Bond B Maturity (years) Coupon rate (%) 20 (paid semiannually) Par value $1,000 $1,000