Now it's time for you to practice what you've learned. Clancy is deciding which two bonds he wants to invest in. Bond A has 26 years remaining to maturity, and the coupon interest rate is 8% per year. Bond B has 21 years to maturity, and the coupon interest rate is 7% per year. Both bonds have a $1,000 par value and the yield to maturity is 10%. Complete by the following table by using a financial calculator to determine the market price for each bond and whether the bond is a premium, discount, or par bond. Market Price Bond Type Bond A Bond B
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- problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variables Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price?Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 13% coupon interest rates and pay annual interest. Bond A has exactly 6 years to maturity, and bond B has 16 years to maturity. b.Calculate the present value of bond B if the required rate of return is: (1) 10%, (2) 13%, and (3) 16%. c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required returns. d. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why? I need all parts and the sub parts answered1 ) Solve the following quesitons in an Excels spreadsheet, and create a cash-flow table for each Bond A and Bond B over 6 years. a) Calculate the yield rates for two bonds described below. b) Correctly use Rate of Return (ROR) analysis to determine which, if either, bond an investor with a MARR of 10%, should purchase. c) Confirm your answer to part (b) using Present Worth Analysis. Type out formulas used and calculations performed. d) Confirm your answer to part (b) using Annual Worth Analysis. Type out formulas used and calculations performed.
- 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 8.9%. Bond C pays a 11% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Assuming that the yield to maturity of each bond remains at 8.9% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 $ fill in the blank 2 $ fill in the blank 3 3 $ fill in the blank 4 $ fill in the blank 5 2 $ fill in the blank 6 $ fill in the blank 7 1 $ fill in the blank 8 $ fill in the blank 9 0 $ fill in the blank 10 $ fill in the blank 11Use of a financial calculator or Excel (functions PRICE and YIELD will be helpful) will be helpful to calculate the following problems. Show your work, include your calculator entries (i.e. N, PV, PMT, FV, IM, and/or Excel formulas where applicable. 1. Suppose there is a bond with a par value of $1,000 that matures in 6 years. Coupon payments are made annually. The coupon rate is 9%. It has a 12% yield to maturity. The annual coupon payments = $ b. The price of the bond today (present value) = $Submit your solutions as an Excel document. Be sure to clearly label the various parts of the problem. 1. Consider the following two bonds that make semi- annual coupon payments. Assume the first coupon payment occurs in exactly six months, and the bond has a face value of $1000 Coupon Rate Time to Maturity YTM Bond A 3.80 % 8 years 3.6% Bond B 3.80% 18 years 4.2% d.) Use a spreadsheet to compute the annualized Macaulay duration and modified duration for Bond A at a yield to maturity of 3.6% Provide an interpretation of the modified duration with regards to maturity and interest rate risk. e.) Use a spreadsheet to calculate the annualized convexity measure of Bond A at a YTM of 3.696. f.) Using the duration approximation formula with a convexity adjustment. what percentage change in the price of Bond A would you expect if the yield decreases by 150 ?
- Working as an investment analyst for a fund that invests in fixed-income assets, you are tasked with evaluating the efficacy of a potential investment. You are given a bond that has a 5% coupon rate and matures in 5 years. Assume comparable debt yields 7% and that the bond is sold in increments of $1,000. What is the value of one increment of the bond?Submit your solutions as an Excel document. Be sure to clearly label the various parts of the problem. 1. Consider the following two bonds that make semi - annual coupon payments. Assume the first coupon payment occurs in exactly six months, and the bond has a face value of $1000. Coupon Rate Time to Maturity YTM Bond A 3.80% 8 years 3.6% Bond B 3.80% 18 years 4.2% a.) What is the current price (t = 0) of Bond A? Be sure to set up the valuation equation. b.) What will be the price of Bond A exactly halfway in between t = 0 and the first coupon date? c.) Using a spreadsheet, plot the price - yield relationship for both Bond A and Bond B on the same set of axes. Do this for a range of yields from 2% to 11% (in increments of 50 basis points). d.) Use a spreadsheet to compute the annualized Macaulay duration and modified duration for Bond A at a yield - to - maturity of 3.6%. Provide an interpretation of the modified duration with regards to maturity and interest rate risk. e.) Use a…Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 13% coupon interest rates and pay annual interest. Bond A has exactly 6 years to maturity, and bond B has 16 years to maturity. a.Calculate the present value of bond A if the required rate of return is: (1) 10%, (2) 13%, and (3) 16%. b.Calculate the present value of bond B if the required rate of return is: (1) 10%, (2) 13%, and (3) 16%. c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required returns. d. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why? I need all parts and the sub parts answered
- Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 11% coupon interest rates and pay annual interest. Bond A has exactly 10 years to maturity, and bond B has 20 years to maturity. a. Calculate the present value of bond A if the required rate of return is: (1) 8%, (2) 11%, and (3) 14%. b. Calculate the present value of bond B if the required rate of return is: (1) 8%, (2) 11%, and (3) 14%. c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required returns. d. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why?problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variables Columbus Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 30 years. Their nominal yield to maturity is 10%, they pay interest quarterlly, and they sell at a price of $980. What is the bond's annual coupon interest rate?Bond valuation related problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time value of money variables Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price?