An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond...
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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% 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 answer to the nearest cent.
Years to Maturity: Price of Bond C Price of Bond Z
| 4 | ||
| 3 | ||
| 2 | ||
| 1 | ||
| 0 |
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