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(2pts) Bond X is a premium $1000 par value bond making annual payments. The bond has...

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Finance

  1. (2pts) Bond X is a premium $1000 par value bond making annualpayments. The bond has a coupon rate of 9%, a YTM of 7%, and has 13years to maturity. Bond Y is a discount $1000 par value bond makingannual payments. This bond has a coupon rate of 7%, a YTM of 9%,and also has 13 years to maturity. What are the prices of thesebonds today? If interest rates remain unchanged, what do you expectthe prices of these bonds to be in 8 years? In 13 years? What’sgoing on here? Illustrate your answers by graphing bond pricesversus time to maturity.

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3.9 Ratings (738 Votes)
a Current Time Bond X Face Value 1000 Coupon Rate 9 YTM 7 and Tenure 13 years Annual Coupon 009 x 1000 90 Bond Price 90 x 1007 x 1110713 1000 10713 116715 Bond Y Face Value 1000 Coupon Rate    See Answer
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(2pts) Bond X is a premium $1000 par value bond making annualpayments. The bond has a coupon rate of 9%, a YTM of 7%, and has 13years to maturity. Bond Y is a discount $1000 par value bond makingannual payments. This bond has a coupon rate of 7%, a YTM of 9%,and also has 13 years to maturity. What are the prices of thesebonds today? If interest rates remain unchanged, what do you expectthe prices of these bonds to be in 8 years? In 13 years? What’sgoing on here? Illustrate your answers by graphing bond pricesversus time to maturity.

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