You are looking at two different bonds, assume FV is $1,000:

A= Premium bond, coupn 9%, YTM 7%, Maturity 13 years.

B=Discount bond, coupon 7%, YTM 9%, Maturity 13 years

(a) What is the price of each bond today?

(b) If interest rates dont change, what should the price of these bonds be one year from now? What about in three years? In eight years? In 12 years? In 13 years? Assume you are computing the prices right after the coupons are paid.

(c) Given the results you found above, what happens to the price of a bond as it approaches maturity?