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Bond X is a premium $1000 par value bond making annual payments. The bond has a coupon rate of 9%, a YTM of 7%, and

Bond X is a premium $1000 par value bond making annual payments. The bond has a coupon rate of 9%, a YTM of 7%, and has 13 years to maturity. Bond Y is a discount $1000 par value bond making annual payments. This bond has a coupon rate of 7%, a YTM of 9%, and also has 13 years to maturity. What are the prices of these bonds today? If interest rates remain unchanged, what do you expect the prices of these bonds to be in 8 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity.

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To calculate the prices of Bond X and Bond Y today we can use the present value formula for bonds P C1r C1r2 ldots CM1rn Where P Price of the bond C C... blur-text-image

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