Bond X is a premium bond making semiannual

payments. The bond pays a coupon rate of 7.4 per cent, has a YTM of 6.8 per cent, and

has 13 years to maturity. Bond Y is a discount bond making semiannual payments.

This bond pays a coupon rate of 6.8 percent, has a YTM of 7.4 percent, and also has

13 years to maturity. What is the price of each bond today? If interest rates remain

unchanged, what do you expect the price of these bonds to be one year from now? In

three years? In eight years? In 12 years? In 13 years? Whats going on here? Illustrate

your answers by graphing bond prices versus time to maturity.