Posted: May 12th, 2021

Bond Value as Maturity Approaches

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 8.6%. One

bond, Bond C, pays an annual coupon of 10.5%; the other bond, Bond Z, is

a zero coupon bond. Assuming that the yield to maturity of each bond

remains at 8.6% over the next 4 years, what will be the price of each of the

bonds at the following time periods? Assume time 0 is today. Fill in the

following table

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