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4 S An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value
4 S 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 8.6%. Bond C pays a 10.5% annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 8.6% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond z 5 3 $ 5 2 $ 5 $ 5 $ b. Select the correct graph based on the time path of prices for each bond. A 1 s Bond Price $1200 Bond 51 000 5800 5600 $400 Bond Z 5200 Years to Maturity B Bond Price $1200 Bond Z $1.000 $800 $600 Bond $400 $200 It 3 Years to Maturity Bond Price $1200 Bond $1.000 $800 Bond Z $600 $400 $200 3 Years to Maturity Bond Z Bond Price! 51200 $1.000 5800 5600 Bond $400 5200 H 2 Years to Maturity The correct sketch is -Select
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