Question: I NEED HELP WITH PART B! thank you Two 25-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and


Two 25-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and promises to pay a 7.0 percent annual coupon, while the second is a zero coupon bond that promises to pay $10,000 (par) after 25 years, with interest accruing at 6.5 percent. At issue, bond market investors require a 8.5 percent interest rate on both bonds. Required: a. What is the initial price on each bond? b. Now assume that both bonds promise interest at 7.0 percent, compounded semiannually. What will be the initial price for each bond? c. If market interest rates fall to 6.0 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What is the initial price on each bond? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Two 25-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and promises to pay a 7.0 percent annual coupon, while the second is a zero coupon bond that promises to pay $10,000 (par) after 25 years, with interest accruing at 6.5 percent. At issue, bond market investors require a 8.5 percent interest rate on both bonds. Required: a. What is the initial price on each bond? b. Now assume that both bonds promise interest at 7.0 percent, compounded semiannually. What will be the initial price for each bond? c. If market interest rates fall to 6.0 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Now assume that both bonds promise interest at 7 percent, compounded semiannually. What will be the initial price for each bond? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Two 25-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and promises to pay a 7.0 percent annual coupon, while the second is a zero coupon bond that promises to pay $10,000 (par) after 25 years, with interest accruing at 6.5 percent. At issue, bond market investors require a 8.5 percent interest rate on both bonds. Required: a. What is the initial price on each bond? b. Now assume that both bonds promise interest at 7.0 percent, compounded semiannually. What will be the initial price for each bond? c. If market interest rates fall to 6.0 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? (x) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. If market interest rates fall to 6 percent at the end of the fith year, what will be the value of each bond, assuming annua! payments as in (a) (state both as a percentage of par value and actual dollar value)? (Do not round intermediate calculations: Round your final answers to 2 decimal places.)
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