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BOND VALUATION An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value
BOND VALUATION 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 9.2%. 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 9.2% 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. Price of Bond Z Years to Maturity Price of Bond C 4 $ 1 0 b. Select the correct graph based on the time path of prices for each bond A b. Select the correct graph based on the time path of prices for each bond A Bond Price $1.200 Bond Z $1.000 $800 Bond C $600 $400 $200 3 1 Years to Maturity Bond Price $1.200 Bond C $1.000 $800 $600 Bond Z $400 Bond Price $1200 Bond C $1.000 $800 Bond Z $600 $4 00 $200 $3 Years to Maturity D Bond Price $1.200 Bond Z $1.000 $800 $600 Bond C $4 00 $200
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