Explain what do think second debenture would be sell for

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You are looking for two debentures that are identical in every way except for their coupons and, of course, their prices. Both have 12 years to maturity.

The first debenture has 10 per cent coupon rate and sells for $93.508. A little exercise using either excel program or trial and error reveals that the market yield is actually 11 per cent. The second has a 12 per cent coupon rate.

Required:

Problem 1: What do you think the second debenture would be sell for? Indicate as to whether it would be selling at a discount or premium.

Reference no: EM132960019

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