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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,
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 10.5% annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 8.4% 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 b. Select the correct graph based on the time path of prices for each bond. Bond Price $1.200 Bond Z $1.000 $800 Bond C $600 $400 $200 14 1 6 Years to Maturity B Bond Price $1.200 $1.000 Bond C $800 $600 Bond Z $400 $200 3 2 1 Years to Maturity Bond Price! $1.200 Bond C $1.000 $800 $600 Bond Z $400 $200 3 1 Years to Maturity D Bond Price! $1.200 Bond Z $1.000 $800 $600 Bond C $400 $200 3 6 Years to Maturity
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