Bond valuationan investor has two bonds in his portfolio, Ask an Expert

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Bond valuation

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 18 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 18 more payments are to be made on Bond L.

What will the value of the Bond L be if the going interest rate is 5%? Round your answer to the nearest cent.

What will the value of the Bond S be if the going interest rate is 5%? 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.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91362309

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