Compute bond value for the following:

An investor has 2 bonds in his portfolio that have face value of $1,000 and pay a 10% annual coupon. Bond L matures in 15 years; Bond S matures in 1 year.

What would be the value of each bond if the market (discount) rate is 5%?

What would be the value of each bond if the market (discount) rate is 12%?

For answer a, are the bonds sold at a premium or discount?

For answer b, are the bonds sold at a premium or discount?