3. What is the total return for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bend in each yean Round your answers to two decimal places. Which of the following bonds has the most price risk? Which has the most reinvestment risk? - A 1-vear bond with an 11% annual coupon - A 5-year bond with an 1196 annual coupon - A S-vear bond with a zero coupon - A 10 -vear bond with an 1146 annual coupon - A-10-year bond with a zero coupon A has the most price risk. A has the most reinvestment risk. 9. Calcuiate the price of each bond (A,B, and C) at the end of each year until maturity, assuming interest rates remain constant, Round your answers to the nearest cent. Q. Calculate the price of each bond ( A4,B,andC ) at the end of each year until maturity, assuming interest rates remain constant. Rourid your answers to the nearest cent. (1) Calculating the bond's nominal yield to maturity (7) Calculating the bond's nominal yield to call each vear? Round your answers to two decimal places, 4. Calculating the price of each bond 1 year from now, the expected capital gains yield for each bond, and the expected total return for each bond e. Mr. Clark is considering another bond, Bond D. (1) Calculating the bond's nominal yield to maturify (2) Calculating the bond's nominal yield to call b. Calculate the price of each of the three bonds; Round your answers to the nearest cent. Price (Bond A) : $ Price (Bond B): 5 Price (Bond c): $ c. Calculate the current yield for each of the three bonds. (Hint: The expected current yield is calculated as the annual interest divided by the price of the bond.) Round yout answers to two decimal places. Current vield (Bond A): Current yleld (Bond B): Current yield (Bond C): d. If the yield to maturity for each bond remains at 11h, what will be the price of each bond I year from now? Round your answers to the nearest cent. Price (Bond A)is 5 c. Calculating the current yield for each of the three bonds Current yietd Bond A Bond B Bond C. d. Catculating the price of each bond 1 year from now, the expected capital gains yield for each bond, and the expected total return for each bond temain constant 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capitat gains vield for each bond in each yean Round your answers to two decimal places. raph showing the time path of each bonds value. Choose the correct graph. th graph is Create a graph showing the time path of each bond's value. Choose the correct graph. The correct oraph is d. If the yield to maturity for each bood remains at 11%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A):5 Price (Bond B): 5 Price (Bond C): 5 What is the expected capital pains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. e. Mr. Clark is considering another bond. Eond 0 , It has a 746 semiannual coupon and a $1,000 face value (1.6. it pays a 535 coupon every 6 months), Bond D is scheduled to mature in 9 years and has a price of 51,140 . It is also callable in 7 vears at a call price of \$1.020. 1. What is the bond's nominal vield to maturity? Round your answer to two decimal places. 1. What is the bond's nominal Vield to maturity? Round your answer to two decimal places. 2. What is the bond's nominal yield to call? Round your answer to two decimal places. 3. If Mr. Clark were to purchase this bond, would he be more lakely to receive the vield to maturity or yield to call? Explain your answer. Because the YTM is the YTC, Mr. Clark expect the bond to be cailed. Consequently, he would eam f. Explain briefly the difference between price tisk and reinvestment risk. This risk of a decline in bond values due to am increase in interest rates is called to a drop in interest rates is called The risk of an income decline dute Which of the following bonds has the most price risk? Which has the mont reinvestment riak? - A Ivear bond with an 11 the anhual coupan Excel Activity: Bond valuation Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds: - Bond A has an 11% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond B has an 8% annual coupon, matures in 12 vears, and has a $1,000 face value. - Bond C has a 14% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a vield to maturity of 11%, The data has been collected in the Microsoft Excel file below, Download the spreadsheet and perform the required analysis to answar the questions below, Do not round intermedlate calculations. Use a minus sion to enter negative values, if any, If an answer is zero, enter "o". a, Before calculating the prices of the bonds, indicate whether each bond is trading at a sremiam, at a discount, or at par. 1. What is the expected current vield for each bond in each vear? Round vour answers to two decimal places. Formulas Each bond has a yield to maturity of 11%. The data has been collected in the Micr osoft Excel file below. Download the spreadsheet and perform the required analysis to answer the: questions below. Do not round intermediate calculations. Use a minus sign to enter negative values, if any, If an answer is zero, enter " 0 ". a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par. Bord A is selling at Bond B in sellino at Bond C is selting at because its coupon rate is because its coupon rate is because its coupon rate is the going interest rate: the going interest rate. the going interest rate. b. Calculate the price of each of the three bonds, Round your answers to the nearest cent. Price (Bond A) is Frice (Bond D)t 3 3. What is the total return for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bend in each yean Round your answers to two decimal places. Which of the following bonds has the most price risk? Which has the most reinvestment risk? - A 1-vear bond with an 11% annual coupon - A 5-year bond with an 1196 annual coupon - A S-vear bond with a zero coupon - A 10 -vear bond with an 1146 annual coupon - A-10-year bond with a zero coupon A has the most price risk. A has the most reinvestment risk. 9. Calcuiate the price of each bond (A,B, and C) at the end of each year until maturity, assuming interest rates remain constant, Round your answers to the nearest cent. Q. Calculate the price of each bond ( A4,B,andC ) at the end of each year until maturity, assuming interest rates remain constant. Rourid your answers to the nearest cent. (1) Calculating the bond's nominal yield to maturity (7) Calculating the bond's nominal yield to call each vear? Round your answers to two decimal places, 4. Calculating the price of each bond 1 year from now, the expected capital gains yield for each bond, and the expected total return for each bond e. Mr. Clark is considering another bond, Bond D. (1) Calculating the bond's nominal yield to maturify (2) Calculating the bond's nominal yield to call b. Calculate the price of each of the three bonds; Round your answers to the nearest cent. Price (Bond A) : $ Price (Bond B): 5 Price (Bond c): $ c. Calculate the current yield for each of the three bonds. (Hint: The expected current yield is calculated as the annual interest divided by the price of the bond.) Round yout answers to two decimal places. Current vield (Bond A): Current yleld (Bond B): Current yield (Bond C): d. If the yield to maturity for each bond remains at 11h, what will be the price of each bond I year from now? Round your answers to the nearest cent. Price (Bond A)is 5 c. Calculating the current yield for each of the three bonds Current yietd Bond A Bond B Bond C. d. Catculating the price of each bond 1 year from now, the expected capital gains yield for each bond, and the expected total return for each bond temain constant 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capitat gains vield for each bond in each yean Round your answers to two decimal places. raph showing the time path of each bonds value. Choose the correct graph. th graph is Create a graph showing the time path of each bond's value. Choose the correct graph. The correct oraph is d. If the yield to maturity for each bood remains at 11%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A):5 Price (Bond B): 5 Price (Bond C): 5 What is the expected capital pains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. e. Mr. Clark is considering another bond. Eond 0 , It has a 746 semiannual coupon and a $1,000 face value (1.6. it pays a 535 coupon every 6 months), Bond D is scheduled to mature in 9 years and has a price of 51,140 . It is also callable in 7 vears at a call price of \$1.020. 1. What is the bond's nominal vield to maturity? Round your answer to two decimal places. 1. What is the bond's nominal Vield to maturity? Round your answer to two decimal places. 2. What is the bond's nominal yield to call? Round your answer to two decimal places. 3. If Mr. Clark were to purchase this bond, would he be more lakely to receive the vield to maturity or yield to call? Explain your answer. Because the YTM is the YTC, Mr. Clark expect the bond to be cailed. Consequently, he would eam f. Explain briefly the difference between price tisk and reinvestment risk. This risk of a decline in bond values due to am increase in interest rates is called to a drop in interest rates is called The risk of an income decline dute Which of the following bonds has the most price risk? Which has the mont reinvestment riak? - A Ivear bond with an 11 the anhual coupan Excel Activity: Bond valuation Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds: - Bond A has an 11% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond B has an 8% annual coupon, matures in 12 vears, and has a $1,000 face value. - Bond C has a 14% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a vield to maturity of 11%, The data has been collected in the Microsoft Excel file below, Download the spreadsheet and perform the required analysis to answar the questions below, Do not round intermedlate calculations. Use a minus sion to enter negative values, if any, If an answer is zero, enter "o". a, Before calculating the prices of the bonds, indicate whether each bond is trading at a sremiam, at a discount, or at par. 1. What is the expected current vield for each bond in each vear? Round vour answers to two decimal places. Formulas Each bond has a yield to maturity of 11%. The data has been collected in the Micr osoft Excel file below. Download the spreadsheet and perform the required analysis to answer the: questions below. Do not round intermediate calculations. Use a minus sign to enter negative values, if any, If an answer is zero, enter " 0 ". a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par. Bord A is selling at Bond B in sellino at Bond C is selting at because its coupon rate is because its coupon rate is because its coupon rate is the going interest rate: the going interest rate. the going interest rate. b. Calculate the price of each of the three bonds, Round your answers to the nearest cent. Price (Bond A) is Frice (Bond D)t 3
