Bond X has a premium bond making semiannual payments. The bond pays a coupon of 8 percent, has a YTM of 6 percent, and has 20 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon of 6 percent, has a YTM of 8 percent, and also has 20 years to maturity. Both bonds have a par value of $1,000. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 6 years? In 12 years? In 17 years? In 20 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price today 1 year 6 years 12 years 17 years 20 years Bond X Bond Y
Bond X has a premium bond making semiannual payments. The bond pays a coupon of 8 percent, has a YTM of 6 percent, and has 20 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon of 6 percent, has a YTM of 8 percent, and also has 20 years to maturity. Both bonds have a par value of $1,000. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 6 years? In 12 years? In 17 years? In 20 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price today 1 year 6 years 12 years 17 years 20 years Bond X Bond Y
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
Section: Chapter Questions
Problem 1PS
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![Problem 8-17 Bond Price Movements
Bond X has a premium bond making semiannual payments. The bond pays a coupon
of 8 percent, has a YTM of 6 percent, and has 20 years to maturity. Bond Y is a discount
bond making semiannual payments. This bond pays a coupon of 6 percent, has a YTM
of 8 percent, and also has 20 years to maturity. Both bonds have a par value of $1,000.
What is the price of each bond today? If interest rates remain unchanged, what do you
expect the price of these bonds to be 1 year from now? In 6 years? In 12 years? In 17
years? In 20 years? (Do not round intermediate calculations and round your answers
to 2 decimal places, e.g., 32.16.)
Price today
1 year
6 years
12 years
17 years
20 years
Bond X
Bond Y](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98dabfc2-ebb4-4b6c-b967-261113535ee4%2Fb6b461e3-d98d-4514-9f95-e46f3d9aafbe%2Fc86or7g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 8-17 Bond Price Movements
Bond X has a premium bond making semiannual payments. The bond pays a coupon
of 8 percent, has a YTM of 6 percent, and has 20 years to maturity. Bond Y is a discount
bond making semiannual payments. This bond pays a coupon of 6 percent, has a YTM
of 8 percent, and also has 20 years to maturity. Both bonds have a par value of $1,000.
What is the price of each bond today? If interest rates remain unchanged, what do you
expect the price of these bonds to be 1 year from now? In 6 years? In 12 years? In 17
years? In 20 years? (Do not round intermediate calculations and round your answers
to 2 decimal places, e.g., 32.16.)
Price today
1 year
6 years
12 years
17 years
20 years
Bond X
Bond Y
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