Interest rates remain unchanged

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Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 7 percent, a YTM of 5 percent, and 17 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 5 percent, a YTM of 7 percent, and also has 17 years to maturity.

What is the price of each bond today? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 8 years? In 12 years? In 16 years? In 17 years?

Reference no: EM131049698

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