The Mariposa Co. has two bonds outstanding. One was issued 25 years ago at a coupon rate of 9%. The other was issued five years ago at a coupon rate of 9%. Both bonds were originally issued with terms of 30 years and face values of $1,000. The going interest rate is 14% today.
A) What are the prices of the two bonds at this time?
B) Discuss the result of part A in terms of risk in investing in bonds.
The Mariposa Co. has two bonds outstanding. One was issued 25 years ago at a coupon rate of 9%.
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