McCurdy Co.'s Class Q bonds have a 12-year maturity, $1, 000 par value, and a 5.75% coupon paid semiannually (2.875% each 6 months), and those bonds sell at their par value.McCurdy's Class P bonds have the same risk, maturity, and par value, but the P bonds pay a 5.75% annual coupon.Neither bond is callable.At what price should the annual payment bond sell?

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These two bonds should provide the same EFF%.Therefore, we can find the EFF% for the semiannual bond and then use it as the YTM for the annual payment bond.At the calculated price, the two bonds will have YTMs with the same EFF%.Note too that the semiannual payment bond must have a higher price than the annual bond because then it receives the same cash flow, but faster.Therefore Bond A must sell at a price below the $1, 000 par value at which S sells. 11ea1b84_8b95_6cc9_a54a_2d5116cd2550_TB3581_00