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Management Studies

An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity equal to 9.6 percent. One bond, Bond C, pays an annual coupon of 10 percent; the other bond, Bond Z, is a zero coupon bond.

a. Assuming that the yield to maturity of each bond remains at 9.6 percent over the next 4 years, what will be the price of each of the bonds at the following time periods? Fill in the following table:

t	Price of Bond C	Price of Bond Z
0	-	-
1	-	-
2	-	-
3	-	-
4	-	-

b. Plot the time path of the prices for each of the two bonds.

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92185522

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