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Problem 4 Intro The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a
Problem 4 Intro The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 5%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 30 years. The market interest rate for similar bonds is 8% (quoted as a semi-annual simple interest rate, so 4% per 6-month period). Part 1 Attempt 1/2 for 10 pts. What is the price of bond A? 971.71 Correct Part 2 1 8 / Attempt 2/2 for 5 pts. What is the price of bond B? 680.65 Correct Part 3 1 8 P Attempt 1/2 for 10 pts. Now assume that yields increase to 11%. What is the price of bond A? 0+ decimals Submit Part 4 1 8 Attempt 1/2 for 10 pts. What is now the price of bond B? 0+ decimals Submit
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