In: Finance
eBook An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.2%. Bond C pays a 11% annual coupon, while Bond Z is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 8.2% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 $ $ 3 $ $ 2 $ $ 1 $ $ 0 $ $ Select the correct graph based on the time path of prices for each bond. The correct sketch is .
As per rules I am answering the first 4 subparts of the question
Price | Price | ||
Sub part | Term | Bond C | Bond Z |
1 | 4 | $1,092.33 | $729.61 |
2 | 3 | $1,071.90 | $789.44 |
3 | 2 | $1,049.79 | $854.17 |
4 | 1 | $1,025.88 | $924.21 |
0 | $1,000.00 | $1,000.00 |
WORKINGS