Question
An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures...
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 11% 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. Do not round intermediate calculations. Round your answers to the nearest cent.
| year to maturity | price of bond c | price of bond Z |
| 4 | ||
| 3 | ||
| 2 | ||
| 1 | ||
| 0 |
Homework Answers
Answer #1
Calculate the price of the bonds as follows:
Formulas:
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