Kawesha Corporation has a premium bond making semiannual payments. The bondpays a 9 percent coupon, has a YTM of 7 percent, and has 13 years to maturity. TheModigliani Company has a discount bond making semiannual payments. This bondpays a 7 percent coupon, has a YTM of 9 percent, and also has 13 years to maturity.If interest rates remain unchanged, what do you expect the price of these bonds to be(a) 1 year from now?(b) In 3 years?
(c) In 8 years?(d) In 12 years?(e) What’s going on here?
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