Answer Happy

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 8.6%. Bond C pays a 10% annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 8.6% 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 जी $ 2 $ $ 1 जी 0 $

b. Plot the time path of prices for each bond. А Bond Price] $12007 $1000! Bond C $800 $600 Bond Z $400 $200 $ 19 4 1 ह Years to Maturity B Bond Price! $1200] Bond Z $1000! $800 $600 Bond C $400 $200 $0 4 1 Years to Maturity

с Bond Price $12001 Bond C $1000 $800 $600 Bond Z $400 $200 1 $O 3 Years to Maturity D Bond Price. $1200 Bond Z $1000 $800 $600 Bond C $400 $200 $0 14 3 Years to Maturity The correct sketch is -Select- -