What should Pat do if the Kool bond is priced at $4,391.89

-Pat should purchase the kool bond

-pat should purchase the portfolio of zero coupon bond.

Pat is considering buying a Kool bond that will generate $1,200, $1,400, $600 and $700 for years 1-4 respectively. The current market rates on a 1,2,3,4 year zero coupon bonds are 1.4%, 2.35%, 3.25%, 4.15%, respectively. The zero-coupon bonds have a par-value of $1,000. Price of Bond What is the value of the following bonds: Bond 1-year zero coupon bond 2-year zero coupon bond 3-year zero coupon bond 4-year zero coupon bond Assuming the risk level of the Kool bond is similar to that of the zero-coupon bonds, what price should Pat be willing to pay for the bond? Pat wants to create a portfolio of zero-coupon bonds that has the same payoff as the Kool bond. How many zero-coupon bonds must Pat buy to create the portfolio. (Assume the investor can buy partial bonds, i.e fractional bonds.) Bond Number of Bonds (Fractional Bonds are ok) 1-year zero coupon bond 2-year zero coupon bond 3-year zero coupon bond 4-year zero coupon bond