What will the value of the bond l be

Reference no: EM131795876

Problem: 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 12 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 12 more payments are to be made on Bond L.

1. What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent.

2. What will the value of the Bond S be if the going interest rate is 4%? Round your answer to the nearest cent.

3. What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent.

4. What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent.

5. What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent.

6. What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent.

Reference no: EM131795876

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