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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
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 9.3%. Bond C pays a 10.5% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet Assuming that the yield to maturity of each bond remains at 9.3% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 890.2 700.68 3 $ 913.72 765.84 2 939.66 837.07 1 $ 968.33 914.91 0 1,000.00 1,000.00 15 16 56 17 Time Paths of Bonds C and Z 18 19 Bond Value 20 $350 21 22 23 24 25 26 27 Chart 28 29 30 31 32 $0 33 4 3 2 1 0 34 35 Years Remaining Until Maturity 36 37 38 39 40 Bond C Bond Z A B C D E F G H 12345600 Bond valuation Bond C Bond Z Length of maturity in years Face value 4 4 $1,000 $1,000 Yield to maturity 7 Annual coupon 8 9.30% 9.30% 10.50% 0.00% Formulas Price of Price of 11 9012345 Years to Maturity Bond C Bond Z Price of Bond C Price of Bond Z 4 #N/A #N/A 3 #N/A #N/A 2 #N/A #N/A 1 #N/A #N/A 0 #N/A #N/A
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