A $1,000 bond has a coupon of 7 percent and matures after eight years. Assume that the bond pays interest annually. What would be the bond's price if comparable debt yields 10 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ What would be the price if comparable debt yields 10 percent and the bond matures after four years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Why are the prices different in a and b? The price of the bond in a is -Select- than the price of the bond in b as the principal payment of the bond in a is -Select- than the principal payment of the bond in b (in time). What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after eight years: CY: % YTM: % The bond matures after four years: CY: % YTM: %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Problem 13-01

A $1,000 bond has a coupon of 7 percent and matures after eight years. Assume that the bond pays interest annually.

What would be the bond's price if comparable debt yields 10 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

$

What would be the price if comparable debt yields 10 percent and the bond matures after four years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

$

Why are the prices different in a and b?
The price of the bond in a is
-Select-
than the price of the bond in b as the principal payment of the bond in a is
-Select-
than the principal payment of the bond in b (in time).

What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places.

The bond matures after eight years:

CY:
%
YTM:
%

The bond matures after four years:

CY:
%
YTM:
%

 
 
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