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Interest rates are presently 10 percent both bonds pay

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A company has two bonds outstanding. The first matures after five years and has a coupon rate of 8.25 percent. The second matures after ten years and has a coupon rate of 8.25 percent. Interest rates are currently 10 percent. Both bonds pay semiannually. What is the present price of each $1,000 bond? Why are these prices different?

Reference no: EM13477179

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