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Bond P is a premium bond with an 8 percent coupon, a YTM of 6 percent, and 15 years to maturity. Bond D is a
Bond P is a premium bond with an 8 percent coupon, a YTM of 6 percent, and 15 years to maturity. Bond D is a discount bond with an 8 percent coupon, a YTM of 10 percent, and also 15 years to maturity. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 5 years? In 10 years? In 14 years? In 15 years? What's going on here? Assume semi-annual compounding.
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