An investor has two bonds in his portfolio that have a face value of $1,000...
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Accounting
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 16 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 16 more payments are to be made on Bond L.
a. What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the nearest cent.
b. What will the value of the Bond S be if the going interest rate is 6%? Round your answer to the nearest cent.
c. What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent.
d. What will the value of the Bond S be if the going interest rate is 8%? Round your answer to the nearest cent.
e. What will the value of the Bond L be if the going interest rate is 13%? Round your answer to the nearest cent.
f. What will the value of the Bond S be if the going interest rate is 13%? Round your answer to the nearest cent.
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