(a)Roosters Fixed Interest Fund evaluates the impact of changing interest rates on a three year investment in the semi-annualTreasury bond GSBU27. Use the yield to maturity (YTM) to calculate the holding period return (HPR) on a three year investment in the Treasury bond GSBU27 in the following scenarios:

i.In three years' time the bond is sold at a YTM which is higher by 0, 25, 50, 75 or 100 basis points or lower by 25, 50, 75 or 100 basis points than the current YTM. Over the three years all the coupons are reinvested at the bond's current YTM. In a labelled table list the nine (9) YTMs and HPRs. On a graph plot the relationship between the YTMs and HPRs. The YTM should be on the vertical axis and the HPR on the horizontal axis

Code Coupon Term Face value Coupon$ Price YTM (p.a.)

GSBU27 0.0275 6.5 100 1.375 107.246 1.573%

My answer was

Changes YTM (Psell) FV( C ) P(sell) HPR

-1.00% 0.573% $8.4139 $107.5331 2.617%

-0.75% 0.823% $8.4139 $106.6350 2.355%

-0.50% 1.073% $8.4139 $105.7457 2.093%

-0.25% 1.323% $8.4139 $104.8651 1.833%

0.00% 1.573% $8.4139 $103.9931 1.573%

0.25% 1.823% $8.4139 $103.1296 1.314%

0.50% 2.073% $8.4139 $102.2744 1.056%

0.75% 2.323% $8.4139 $101.4276 0.799%

1.00% 2.573% $8.4139 $100.5890 0.542%

Is my answer correct?

I have used the formulas of calculation as below:

-FV_coupons= Coupons$ x{[(1+r) ⁿ -1]/r},

In excel formula: -FV(YTM/2,nper,pmt, pv)

is this excel formula correct? I have put the nper as 6

-Sell price= Coupons$ x [1-(1+r)^-n]/r+ Face value/(1+r)ⁿ

In excel formula: -PV(YTM/2,nprm,pmt,fv),

is this excel formula correct? I have put the nprm as 7

-HPR=2x{[(P_sell + FV_coupons)/ P_buy]^1/n-1}

If this was three and half year investment,

in -Sell price= Coupons$ x [1-(1+r)^-n]/r+ Face value/(1+r)ⁿ / In excel formula: -PV(YTM/2,nprm,pmt,fv),

is it n = 7 / nprm =8 ?

in FV_coupons= Coupons$ x{[(1+r) ⁿ -1]/r}, / In excel formula: -FV(YTM/2,nper,pmt, pv)

is it n = 7 / nper =7 ?

Thank you.