Use the following information for parts A, B and C:

• Bond A has a 7% annual coupon, matures in 12 years, and has a $1,000 face value.
• Bond B has a 9% annual coupon, matures in 12 years, and has a $1,000 face value.
• Bond C has an 11% annual coupon, matures in 12 years, and has a $1,000 face value.
• Each bond has a yield to maturity of 9%.

1. Calculate the price of each of the three bonds.

For example,

Basic Input Data	Bond A	Bond B	Bond C
Years to maturity	12
Periods per year	1
Periods to maturity	12
Coupon rate	7%
Par value	1000
Periodic payment	70
Yield to maturity	9%
VB0	$856.79

2. Calculate the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant.

For example,

Years Remaining Until Maturity	Bond A	Bond B	Bond C
12	$856.79
11	$863.90
10	$871.65
9	$880.10
8	$889.30
7	$899.34
6	$910.28
5	$922.21
4	$935.21
3	$949.37
2	$964.82
1	$981.65
0	$1,000.00

3. Create a graph showing the time path of each bonds value on the same graph (see Figure 7.2).

For example, the first bond would appear as: