Question

An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 13 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 13 more payments are to be made on Bond L. What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 6%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent.

Answer 1

What will the value of the Bond L be if the going interest rate is 6%

=(1000*10%)*((1-(1+6%)^(-13))/6%)+1000/(1+6%)^13

=1354.11

What will the value of the Bond S be if the going interest rate is 6%

=(1000*10%)*((1-(1+6%)^(-1))/6%)+1000/(1+6%)^1

=1037.74

What will the value of the Bond L be if the going interest rate is 9%

=(1000*10%)*((1-(1+9%)^(-13))/9%)+1000/(1+9%)^13

=1074.87

What will the value of the Bond S be if the going interest rate is 9%

=(1000*10%)*((1-(1+9%)^(-1))/9%)+1000/(1+9%)^1

=1009.17

What will the value of the Bond L be if the going interest rate is 12%

=(1000*10%)*((1-(1+12%)^(-13))/12%)+1000/(1+12%)^13

=871.53

What will the value of the Bond S be if the going interest rate is 12%

=(1000*10%)*((1-(1+12%)^(-1))/12%)+1000/(1+12%)^1

=982.14

the above is answer..