Question

Miller Corporation has a premium bond making semiannual payments. The bond pays an 7 percent coupon, has a YTM of 5 percent, and has 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond pays a 5 percent coupon, has a YTM of 7 percent, and also has 16 years to maturity. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? 8 years? 13 years? 14 years? 16 years?

Price of bond	Miller Corporation Bond	Modigliani Company Bond
One year	$	$
8 years	$	$
13 years	$	$
14 years	$	$
16 years	$	$

Answer 1

If interest rate remain unchanged,priceof the bond over different maturity schedule :