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An investor has two bonds in his portfolio that both have a facevalue of $1,000 and pay a 6% annual coupon. Bond L matures in 18years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on BondS at its maturity and that 18 more payments are to be made on BondL.

What will the value of the Bond L be if the going interest rate is8%? Round your answer to the nearest cent.
$

What will the value of the Bond L be if the going interest rate is14%? Round your answer to the nearest cent.
$

What will the value of the Bond S be if the going interest rate is14%? Round your answer to the nearest cent.
$

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Lelia Lubowitz
Lelia LubowitzLv2
28 Sep 2019

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An investor has two bonds in his portfolio. Each bond matures in4 years, has a face value of $1,000, and has a yield to maturityequal to 8.5%. One bond, Bond C, pays an annual coupon of 10.5%;the other bond, Bond Z, is a zero coupon bond. Assuming that theyield to maturity of each bond remains at 8.5% over the next 4years, what will be the price of each of the bonds at the followingtime periods? Assume time 0 is today. Fill in the following table.Round your answers to the nearest cent.

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(Bond valuation​)

​Hamilton, Inc. bonds have a coupon rate of 14%. The interest ispaid​ semiannually, and the bonds mature in 5 years. Their parvalue is ​$1,000.

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​$_________

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1)

Desmond Corp. purchased 5, $1,000, 55​% bonds of Geotherm Corporation when the market rate of interest was 14​%. Interest is paid semiannually on the​ bonds, and the bonds will mature in four years. Using the PV function in Excel ​@, compute the price Desmond paid​ (the present​ value) on the bond investment.

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Hodson Corp. purchased 10, $1,000, 4​% bonds of Power Source Corporation when the market rate of interest was 8​%. Interest is paid semiannually on the​ bonds, and the bonds will mature in six years.

Using the PV function in excel @, compute the price Hodson paid​ (the present​ value) on the bond investment.​

(Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest​ cent.)

Hodson paid $---- on the bond investment.?

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