Question

An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.4%. Bond C pays a 12.5% annual coupon, while Bond Z is a zero coupon bond.

Assuming that the yield to maturity of each bond remains at 8.4% over the next 4 years, calculate the price of the bonds at each of the following years to maturity.

Round your answers to the nearest cent. Y

Years to Maturity Price of Bond C Price of Bond Z

4 $   $  

3 $   $  

2 $   $  

1 $   $  

0 $   $  

Answer 1

Year. Bond C. Bond Z

4. 1134.58. 724.24

3. 1104.87. 785.08

2. 1072.70. 851.02

1. 1037.82. 922.51

0. 1000. 1000