An investor has two bonds in his portfolio that have a face
value of $1,000 and pay a 8% annual coupon. Bond L matures in 10
years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on Bond
S at its maturity and that 10 more payments are to be made on Bond
L.

- What will the value of the Bond L be if the going interest rate
is 6%? Round your answer to the nearest cent.

$

What will the value of the Bond S be if the going interest rate is
6%? Round your answer to the nearest cent.

$

What will the value of the Bond L be if the going interest rate is
8%? Round your answer to the nearest cent.

$

What will the value of the Bond S be if the going interest rate is
8%? Round your answer to the nearest cent.

$

What will the value of the Bond L be if the going interest rate is
14%? Round your answer to the nearest cent.

$

What will the value of the Bond S be if the going interest rate is
14%? Round your answer to the nearest cent.

$

### Answer Preview

Bond S K = N Bond Price = [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N k=1

# Get Answer Now

Buy (USD $9.00)