a) Johnson Motors’ bonds have 10 years remaining to maturity. Coupon interest is paid annually, the bonds have a $1,000 par value, and the coupon rate is 7 percent. The bonds have a yield to maturity of 8 percent. What is the current market price of these bonds?
b) BSW Corporation has a bond issue outstanding with an annual coupon rate of 7 percent paid semiannually and four years remaining until maturity. The par value of the bond is $1,000. Determine the fair present value of the bond if market conditions justify a 14 percent annual required rate of return, compounded semiannually.
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