BONDS!!!! HELP PLEASE

BONDS!!!! HELP PLEASE

Assume that you buy a $1,000 par value bond at a premium and that it matures in 10 years.

a. What would you expect the value of the bond to do if the interest that investors were willing to accept on the bond did not change from
the day you purchased it to maturity?

b. Why would the interest payments have a greater impact on the value of the bond initially and the maturity value have a greater impact
on the value of the bond as it gets closer to the maturity date?

c. Approximately what would the value of the bond be one day before the maturity date, assuming that there is no expectation of
default?

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