Describe what it means if a bond sells at a discount are, Financial Management

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Describe what it means if a bond sells at a discount are

Consider the two bonds described below:

Bond A : Maturity 3 years ,Annual Coupon Rate (Paid semiannually) 10% ,Face Value$1,000

Bond B : Maturity 2 years ,Annual Coupon Rate (Paid semiannually) 6%, Face Value $1,000

a. If both bonds had a required return of 8%, what would the bonds’ prices be?

b. Describe what it means if a bond sells at a discount. Are these two bonds selling at a discount? Why or why not?

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