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Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8 percent, a YTM of 6 percent, and 14
Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8 percent, a YTM of 6 percent, and 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 6 percent, a YTM of 8 percent, and also has 14 years to maturity. Both bonds have a par value of $1,000. a. What is the price of each bond today? b. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 5 years? In 9 years? In 13 years? In 14 years? Note: For all requirements, do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8 percent, a YTM of 6 percent, and 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 6 percent, a YTM of 8 percent, and also has 14 years to maturity. Both bonds have a par value of $1,000. a. What is the price of each bond today? b. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 5 years? In 9 years? In 13 years? In 14 years? Note: For all requirements, do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16
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