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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 10% annual coupon. Bond L matures in 13 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 13 more payments are to be made on Bond L.
What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent.
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What will the value of the Bond S be if the going interest rate is 4%? 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 12%? Round your answer to the nearest cent.
What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent.
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