Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8.5 percent, a YTM of 6.5 percent, and has
18 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 6.5 percent, a YTM of
8.5 percent, and also has 18 years to maturity. Assume the interest rates remain unchanged and both bonds have a par value of
$1,000.
a. What are the prices of these bonds today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. What do you expect the prices of these bonds to be in one year?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. What do you expect the prices of these bonds to be in three years?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
d. What do you expect the prices of these bonds to be in eight years?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,32.16.
e. What do you expect the prices of these bonds to be in 12 years?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
f. What do you expect the prices of these bonds to be in 18 years?
Note: Do not round intermediate calculations.
a. Price today
b. Price in one year
c. Price in three years
d. Price in eight years
e. Price in 12 years
f. Price in 18 years
Bond X
Bond Y
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Transcribed Image Text:Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8.5 percent, a YTM of 6.5 percent, and has 18 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 6.5 percent, a YTM of 8.5 percent, and also has 18 years to maturity. Assume the interest rates remain unchanged and both bonds have a par value of $1,000. a. What are the prices of these bonds today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What do you expect the prices of these bonds to be in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What do you expect the prices of these bonds to be in three years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What do you expect the prices of these bonds to be in eight years? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,32.16. e. What do you expect the prices of these bonds to be in 12 years? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. f. What do you expect the prices of these bonds to be in 18 years? Note: Do not round intermediate calculations. a. Price today b. Price in one year c. Price in three years d. Price in eight years e. Price in 12 years f. Price in 18 years Bond X Bond Y
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