A company has outstanding bonds with a 6 year maturity, $1,000 par value and 7% coupon paid semiannually and those bonds sell at their par price. This same company has another bond with the same risk, maturity and par value but this second bond pays a 7% annual coupon. What is an estimate of the price of the annual coupon bond?
The semi annual bonds sell at par and so the effective yield is (1+3.5%)^-1 = ...
The solution explains how to calculate the bond price.