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Question 6 20 pts Answer the following two questions: a. Bond X is a premium bond making semiannual payments. The bond pays a coupon rate

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Question 6 20 pts Answer the following two questions: a. Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 8 percent, has a YTM of 6 percent, and has 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a YTM of 8 percent, and also has 14 years to maturity. The bonds have a $1,000 par value. 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 five years? In 14 years? Show your work (calculator inputs to get credit) b. Inflation has remained low for the past three years, but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching the same conclusion. What adjustments should you make to your bond portfolio in light of your conclusions? HTML Editora B IV A - AI E E 31 "* , EE - EP EN VOW T1 12pt - Paragraph

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