According to Figure 13.3, as a bond approaches maturity, the premium (or discount) reduces to zero. Prove

Question:

According to Figure 13.3, as a bond approaches the premium (or discount) reduces to zero. Prove this by calculating the sales price with 7, 5, and 2 years remaining to for the following two bonds. Assume a constant yield to of 8 percent.
a. A 10-year, 10 percent annual bond
b. A 10-year, 6 percent annual bond
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...