An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.4%. Bond C pays a 10% annual coupon, while Bond Z is a zero coupon bond.
1. Assuming that the yield to maturity of each bond remains at 8.4% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Round your answer to the nearest cent.
|
Years to Maturity
|
Price of Bond C
|
Price of Bond Z
|
|
4
|
$
|
$
|
|
3
|
$
|
$
|
|
2
|
$
|
$
|
|
1
|
$
|
$
|
|
0
|
$
|
$
|