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What is the price of the bonds with 5 yrs to maturity

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Question: The Nickelodeon Manufacturing Co. has a series of $1,000 par value bonds outstanding. The bonds pay interest semi-annually, and some are due in 5 years while other are due in 9 years. The details on the bonds follow:

Coupon rate - 10%

Required rate of return - 17%

What is the price of :

a) the bonds with 5 yrs to maturity?

b) the bonds with 9 years to maturity?

c) Explain why the current market values of the bonds differ even though they have the same coupon payments.

Reference no: EM132753065

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