KIC Inc. plans to issue $6.1 million of bonds with a coupon rate of 10...
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KIC Inc. plans to issue $6.1 million of bonds with a coupon rate of 10 percent paid semi-annually and 30 years to maturity. The current market interest rate on these bonds is 9.00 percent. In one year, the interest rate on the bonds will be either 12.00 percent or 6 percent with equal probability. Assume investors are risk neutral. a. If the bonds are non-callable, what is the price of the bonds today? (Do not round intermediate calculations. Enter the answer in dollars. Omit $ sign in your response.) Price of the bonds $ b. If the bonds are callable one year from today at $1,560, will their price be greater or less than the price you computed in part (a)? O Less than O Greater than
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