Question
miller corporation has a premium bond making semiaannual payments. the bond pays a coupon of 6.5 percent, has a ytm of 5.3 percent and has
miller corporation has a premium bond making semiaannual payments. the bond pays a coupon of 6.5 percent, has a ytm of 5.3 percent and has 13 years to maturity. the modigiliani company has a discount bond making semiannual payments. this bond pays a coupon of 5.3 percent, has a ytm of 6.5 percent and also has 13 years to maturity. both bonds have a par value of $1,000. if intrest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? in 3 years? in 8 years? in 12 years? in 13 years? whats going on here? illustrate your answers by graphing bond prices versus time to maturity.
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