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Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.1 percent, a YTM of 7.1 percent, and has 16 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 7.1 percent, a YTM of 9.1 percent, and also has 16 years to maturity. Assume the interest rates remain unchanged and both bonds have a par value of $1,000. What are the prices of these bonds today? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price Bond X $ Bond Y $
Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.1 percent, a YTM of 7.1 percent, and has 16 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 7.1 percent, a YTM of 9.1 percent, and also has 16 years to maturity. Assume the interest rates remain unchanged and both bonds have a par value of $1,000. What are the prices of these bonds today? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price Bond X $ Bond Y $
Final answer:To calculate the prices of the given bonds, you need to compute thepresent valuesof both the future coupon payments and the face value. The bond price for Bond X, a premium bond, and Bond Y, a discount bond, can be found by plugging known values into the respective formulas.Explanation:This question revolves around the calculation of bond prices given specific information about each bond's coupon rate, yield to maturity (YTM), and time until maturity. There are specific formulas for calculating the prices of both discount and premium bonds.For apremium bondlike Bond X, the price is calculated by adding the present values of the future coupon payments and the face value. Given the semiannual payments, the per period (semiannual) coupon payment is $1,000 x 9.1%/2 = $45.50. With 16 years to maturity and semiannual coupon payments, there are 32 periods. Therefore, the price of Bond X is computed as follows: $45.50 x [(1 - (1 + 7.1%/2)^-32) / (7.1%/2)] + $1,000 / (1 + 7.1%/2)^32.For adiscount bondlike Bond Y, the calculation is similar, although the coupon rate and YTM are lower. The semiannual coupon payment is $1,000 x 7.1%/2 = $35.50. Therefore, the price of Bond Y is computed as: $35.50 x [(1 - (1 + 9.1%/2)^-32) / (9.1%/2)] + $1,000 / (1 + 9.1%/2)^32.Learn more aboutBond Pricinghere:brainly.com/question/31849706#SPJ11...