Two firms a amd b have 1000 par value bond issues

Reference no: EM13618927

Two firms ( A amd B) have $1000 par value bond issues outstanding that have the same maturity ( 20 years) and risk. Firm A's bond has an 8% annual coupon rate, while firm B's bond has an 8% semiannual coupon rate. If the nominal required rate of return is 12%, semiannual basis, for both bonds, what is the difference in the current market prices of the two bonds?

Reference no: EM13618927

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