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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 9%. Bond C pays a 11.5% annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 9% 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. Plot the time path of prices for each bond. Bond Price $1200 Bond Z $10001 $800 $600 Bond C $400 $200 50 3 Years to Maturity Bond Price $12001 Bond C $1000! $800 $600 Bond Z $400 $200 50 14 3 1 Years to Maturity Bond Price! Price] $12001 Bond C $1000! $800 $600 Bond Z $400 $200 $0 14 3 Years to Maturity D Bond Price $1200l Bond Z $10001 $800 $600 Bond C $400 $200 50 3 2 1 Veet Maturit
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