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You own a two-bond portfolio. Each has a par value of $1000. Bond A matures in 5 years, has a coupon rate of 8 percent,
You own a two-bond portfolio. Each has a par value of $1000. Bond A matures in 5 years, has a coupon rate of 8 percent, and has a annual yield to maturity of 9.20 percent. Bond B matures in 15 years, has a coupon rate of 8 percent and has an annual yield to maturity of 9.20 percent. Both bonds pay interest semiannually. What is the value of your portfolio? What happens to the value of your portfolio if each yield to maturity rises by one percentage point? Show your work including Variables and Formulas. Be as detailed as possible.
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