What is the price of each bond today

Reference no: EM133377402

Question: Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 10 percent, a YTM of 8 percent, and 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 8 percent, a YTM of 10 percent, and also has 16 years to maturity. Both bonds have a par value of $1,000.

a. What is the price of each bond today? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

b. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 7 years? In 11 years? In 15 years? In 16 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Reference no: EM133377402

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