Question: Problem 13. Suppose there are two bonds you are considering Bond A Bond B Bond A Bond B Maturity (years) 20 30 Coupon rate (%)

Problem 13. Suppose there are two bonds you are considering Bond A Bond B

	Bond A	Bond B
Maturity (years)	20	30
Coupon rate (%)	12	8
Par value	1000	1000

(a) If both bonds had a required rate of return of 10%, what would the bonds' prices be?

(b) Explain what it means when a bond is selling at a discount, a premium, or at its face amount (par value). Based on results in part (a), would you consider both bonds to be selling at a discount, premium, or at par?

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