You own four bonds in your portfolio. They all mature 20 years from now, have the same face value of $1,000 and are yielding 9.6%. Other info about them is as follows.

• Bond SP Super Premium bond: pays 20% annual coupon
• Bond P Premium bond: pays 11% annual coupon
• Bond D Discount bond: pays 6% annual coupon
• Bond DD - Deep Discount bond (also called Zero-Coupon Bond): pays no coupon.

Assume that the yield on the bond remains the same for next 20 years. Find the bond prices at the end of each year and populate the table below. Draw a chart showing the results of all four bonds and the chart would look line the chart displayed in slide # 6.15 of the class lectures.

Note: This should be done in Excel. Use the Excel Function PV to get the answers and the formula can be copied from cell to cell. You will get PV as a negative number and you can change it as a positive number for graphing. Function looks like -PV (rate, periods, coupon, face value).

Looking at the results comment on the bond price as maturity approaches.