Question: Consider a two bonds describe here: Bond A. Bond B Maturity 15yrs. 20yrs Coupon Rate. 10% 6% (paid semi-annually) Face Value. $1000 $1000 a. If

Consider a two bonds describe here: Bond A. Bond B Maturity 15yrs. 20yrs Coupon Rate. 10% 6% (paid semi-annually) Face Value. $1000 $1000

a. If both bonds had a required return of 8%, what would the bonds prices be?

b. Which bond is selling at a premium and which is selling at a discount?

c. If the required return on the two bonds rose to 10%, what would the bonds prices be?

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