Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 8 percent, has a YTM of 6 percent, and has 14 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a YTM of 8 percent, and also has 14 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now?

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2 Jun 2021

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Bond X is a premium bond making semiannual payments. The bond pays a 9 percent coupon, has a YTM of 7 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a 7 percent coupon, has a YTM of 9 percent, and also has 13 years to maturity. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In three years? In eight years? In 12 years? In 13 years? What’s going on here? Illustrate your answers by graphing bond prices versus time to maturity.

Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 10 percent, has a YTM of 8 percent, and has 20 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 8 percent, has a YTM of 10 percent, and also has 20 years to maturity. The bonds have a $1,000 par value.

What is the price of each bond today? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)


Price of Bond X	$
Price of Bond Y	$

If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In ten years? In fifteen years? In 19 years? In 20 years? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Price of bond	Bond X	Bond Y
One year	$	$
Ten years	$	$
Fifteen years	$	$
19 years	$	$
20 years	$	$

Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 11 percent, has a YTM of 9 percent, and has 11 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 9 percent, has a YTM of 11 percent, and also has 11 years to maturity. The bonds have a $1,000 par value.

What is the price of each bond today? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)


Price of Bond X	$
Price of Bond Y	$

If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In two years? In seven years? In 9 years? In 11 years? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Price of bond	Bond X	Bond Y
One year	$	$
Two years	$	$
Seven years	$	$
9 years	$	$
11 years	$	$

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