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Why the current market values of the bonds differ

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Reference no: EM132740719

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 9%
Required rate of return 17%

What is the price of:

Problem A) the bonds with 5 years to maturity?

Problem B) the bonds with 9 years to maturity?

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

Reference no: EM132740719

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