Question: . Bond P is a premium bond with an 8 percent coupon, a YTM of 6 percent, and 1 5 years to maturity. Bond D

. Bond P is a premium bond with an 8 percent coupon, a YTM of 6 percent, and 15 years to maturity. Bond D is a discount bond with an 8 percent coupon and a YTM of 10 percent, and also has 15 years to maturity. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 5 years? In 10 years?
Answer Model:
Solve the problem by using appropriate formula and calculation. Discuss the effect on the price of bond with change in No. of years.

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