What happens to price of bond as it approaches maturity

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Reference no: EM131456842

You are looking at two different bonds:

X Y

Type: premium bond discount bond

Coupon: 9% 7%

YTM: 7% 9%

Maturity 13 years 13 years:

(a) What is the price of each bond today?

(b) If interest rates don’t change, what should the price of these bonds be in 1, 3, 8, 12 and 13 years from now? Assume you are computing the prices right after the coupons are paid.

Reference no: EM131456842

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