(a) Use the YIELD command in excel to calculate the bonds yield to maturity on each of the dates.

(b) How is the bonds yield to maturity related to its credit rating?

(c) What is happening on 30 June 1937?

(d) Calculate the dirty price (including accrued interest) on

i. 31 May 1927,

ii. 31 July 1931,

iii. 30 June 1937.

You may find the ACCRINT command in excel useful here.

(e) What was the holding period return for an investor who held the bond from

i. 31 May 1927 to 31 July 1931?

ii. 31 July 1931 to 30 June 1937?

(f) What was the effective annual return for

i. 31 May 1927 to 31 July 1931?

ii. 31 July 1931 to 30 June 1937?

3. Third Avenue Railroad Company First Gold 5s were bonds (issued by the Third Avenue Railroad Company) that matured on 1 July 1937 . They paid coupons on 1 July and 1 January. We observe the following prices The bond had accrued interest calculated using US 30/360 (it was a corporate bond in the U.S.). (a) Use the YIELD command in excel to calculate the bond's yield to maturity on each of the dates. (b) How is the bond's yield to maturity related to its credit rating? (c) What is happening on 30 June 1937? (d) Calculate the dirty price (including accrued interest) on i. 31 May 1927, ii. 31 July 1931, iii. 30 June 1937. Hint: you may find the ACCRINT command in excel useful here. (e) What was the holding period return for an investor who held the bond from i. 31 May 1927 to 31 July 1931 ? ii. 31 July 1931 to 30 June 1937 ? (f) What was the effective annual return for i. 31 May 1927 to 31 July 1931 ? ii. 31 July 1931 to 30 June 1937 ? 3. Third Avenue Railroad Company First Gold 5s were bonds (issued by the Third Avenue Railroad Company) that matured on 1 July 1937 . They paid coupons on 1 July and 1 January. We observe the following prices The bond had accrued interest calculated using US 30/360 (it was a corporate bond in the U.S.). (a) Use the YIELD command in excel to calculate the bond's yield to maturity on each of the dates. (b) How is the bond's yield to maturity related to its credit rating? (c) What is happening on 30 June 1937? (d) Calculate the dirty price (including accrued interest) on i. 31 May 1927, ii. 31 July 1931, iii. 30 June 1937. Hint: you may find the ACCRINT command in excel useful here. (e) What was the holding period return for an investor who held the bond from i. 31 May 1927 to 31 July 1931 ? ii. 31 July 1931 to 30 June 1937 ? (f) What was the effective annual return for i. 31 May 1927 to 31 July 1931 ? ii. 31 July 1931 to 30 June 1937