ABC Corporation has issued a series of bonds maturing in 3 years with face value of $1,000. The bonds make annual interest payments of $120. XYZ Corporation has also issued a series of bonds maturing in 3 years with face value of $1,000. However, XYZ's bonds will make annual interest payments of $60. Currently, in the market, XYZ's bonds offer a yield of 20% while ABC corporation bonds offer a yield of 8%. Calculate the current market prices of each corporation's bonds. Is either corporate bond trading at below face value?

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The Answer of ABC Corporation has issued a series of bonds maturing in 3 years with face value of $1,000. The bonds make annual interest payments of $120. XYZ Corporation has also issued a series of bonds maturing in 3 years with face value of $1,000. However, XYZ's bonds will make annual interest payments of $60. Currently, in the market, XYZ's bonds offer a yield of 20% while ABC corporation bonds offer a yield of 8%. Calculate the current market prices of each corporation's bonds. Is either corporate bond trading at below face value?

ABC Corporation Has Issued a Series of Bonds Maturing in 3