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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A bond with $1000 face value and $50 annual coupon payments is currently being priced at $1.175. What is the bond coupon rate?
Bond A is a premium bond making semiannual payments. The bond has a coupon rate of 7.5%, a YTM of 6%, and 13 years to maturity. Bond B is a discount bond making semiannual payments. This bond has a coupon rate of 6%, a YTM of 7.5%, and also 13 years to maturity. What are the prices of these bonds today assuming both bonds have a $ 1000 par value? If interest rates remain unchanged, what do you expect the prices of these bonds to be in 2 years and in 12 years?
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