Bond X is a premium bond making annual payments. The bond pays an 8 percent coup
ID: 2691622 • Letter: B
Question
Bond X is a premium bond making annual payments. The bond pays an 8 percent coupon, has a YTM of 6 percent, and has 13 years to maturity. Bond Y is a discount bond making annual payments. This bond pays a 6 percent coupon, has a YTM of 8 percent, and also has 13 years to maturity. If interest rates remain unchanged, you would expect that one year from now, Bonds X and Y will be priced at $ and $, respectively. In three years, they will be priced at $ and $ . In eight years: $ and $ . In 12 years: $ and $. And in 13 years: $ and $ .Explanation / Answer
Hi, If you like my answer, please rate my answer first and according to my answer...that way only I can earn points. Thanks Year Bond X Value 0 0 117.71 1 8 116.77 2 8 115.77 3 8 114.72 4 8 113.60 5 8 112.42 6 8 111.16 7 8 109.83 8 8 108.42 9 8 106.93 10 8 105.35 11 8 103.67 12 8 101.89 13 108 100.00 Year Bond Y Value 0 0 84.19 1 6 84.93 2 6 85.72 3 6 86.58 4 6 87.51 5 6 88.51 6 6 89.59 7 6 90.75 8 6 92.01 9 6 93.38 10 6 94.85 11 6 96.43 12 6 98.15 13 106 100.00