Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 8 percent, has a YTM of 6 percent, and has 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a YTM of 8 percent, and also has 14 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 five years? In 10 years? In 12 years? In 14 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price of bond Bond X Bond Y Today In one year In five years In 10 years In 12 years In 14 years
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 8 percent, has a YTM of 6 percent, and has 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a YTM of 8 percent, and also has 14 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 five years? In 10 years? In 12 years? In 14 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price of bond Bond X Bond Y Today In one year In five years In 10 years In 12 years In 14 years
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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Transcribed Image Text:Bond X is a premium bond making semiannual payments. The bond pays a coupon rate
of 8 percent, has a YTM of 6 percent, and has 14 years to maturity. Bond Y is a discount
bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a
YTM of 8 percent, and also has 14 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 five years? In 10 years?
In 12 years? In 14 years? (Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Price of bond
Bond X
Bond Y
Today
In one year
In five years
In 10 years
In 12 years
In 14 years
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