Explain what is the difference in current market prices

Reference no: EM1314525

Bond Valuation.

Bond value

Assume that McDonald\'s and Burger King have similar $1,000 par value bond issues outstanding. The bonds are equally risky. The Burger King bond has an annual coupon rate of 8 percent and matures 20 years from today. The McDonald's bond has a coupon rate of 8 percent, with interest paid semi-annually, and it also matures in 20 years. If the nominal required rate of return, kd, is 12 percent, semi-annual basis, for both bonds, what is the difference in current market prices of the two bonds?

Reference no: EM1314525

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