Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7 percent, has a YTM of 5 percent, and has 17 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a YTM of 7 percent, and also has 17 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In seven years? In 12 years? In 16 years? In 17 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Price of bond Today In one year In seven years In 12 years In 16 years In 17 years $ $ $ $ $ $ Bond X 35.00 X 1,227.24 $ 1,218.49 $ 1,155.89 $ 1,087.52 $ 1,019 S Bond Y 25.00 802.99 809.31 X 857.88 x 916.83 981 X
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7 percent, has a YTM of 5 percent, and has 17 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a YTM of 7 percent, and also has 17 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In seven years? In 12 years? In 16 years? In 17 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Price of bond Today In one year In seven years In 12 years In 16 years In 17 years $ $ $ $ $ $ Bond X 35.00 X 1,227.24 $ 1,218.49 $ 1,155.89 $ 1,087.52 $ 1,019 S Bond Y 25.00 802.99 809.31 X 857.88 x 916.83 981 X
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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Question
F117.
![Problem 7-18 Bond Price Movements [LO2]
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate
of 7 percent, has a YTM of 5 percent, and has 17 years to maturity. Bond Y is a discount
bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a
YTM of 7 percent, and also has 17 years to maturity. The bonds have a $1,000 par
value. What is the price of each bond today? If interest rates remain unchanged, what do
you expect the price of these bonds to be one year from now? In seven years? In 12
years? In 16 years? In 17 years? (Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Answer is complete but not entirely correct.
Bond Y
Price of bond
Today
In one year
In seven years
In 12 years
In 16 years
In 17 years
$
$
$
$
$
$
Bond X
35.00 $
1,227.24 $
1,218.49 $
1,155.89 $
1,087.52
$
1,019
S
25.00
802.99
809.31 X
857.88X
916.83 x
981](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa83d1045-6281-45cc-ad9c-9377e3fa698e%2F75cb5cb0-4110-4599-bd1f-d65d7d961c04%2F316h53d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 7-18 Bond Price Movements [LO2]
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate
of 7 percent, has a YTM of 5 percent, and has 17 years to maturity. Bond Y is a discount
bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a
YTM of 7 percent, and also has 17 years to maturity. The bonds have a $1,000 par
value. What is the price of each bond today? If interest rates remain unchanged, what do
you expect the price of these bonds to be one year from now? In seven years? In 12
years? In 16 years? In 17 years? (Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Answer is complete but not entirely correct.
Bond Y
Price of bond
Today
In one year
In seven years
In 12 years
In 16 years
In 17 years
$
$
$
$
$
$
Bond X
35.00 $
1,227.24 $
1,218.49 $
1,155.89 $
1,087.52
$
1,019
S
25.00
802.99
809.31 X
857.88X
916.83 x
981
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