Analyzing a bond issued by Proctor & Gamble. The bond has a 4.5% coupon (paid annually), $1000 par amount, and matures in February 15, 2025. Assume that the coupon in February 15, 2019 has just passed, and the next coupon is exactly 1 year away (February 15, 2020). Questions 1. Start by downloading the spot rates for various maturity COUPON Treasury STRIPS from the Wall Street Journal (see attached excel le). Next, plot the spot rate curve of STRIP securities corresponding to cash ows of the Proctor & Gamble bond using the "Asked Yield" column. Include the [clearly labeled] plot in the Word document. (Hint: the rst observation will be the "Ask Yield" on a stripped coupon interest that matures February 15, 2020). 2. Calculate the price and YTM of the bond. Assume that this bond has similar risk characteristics to the Treasury STRIPS. Is the bond trading at a premium or discount? Explain why. Under what conditions will the investor realize the YTM? 3. Calculate the duration, modied duration, and convexity of the bond using the present values derived in question 2. Interpret duration and modied duration 4. Using the estimates above, calculate what will happen to the price of the bond when interest rates fall 75 bp (.75%) and 150 bp (1.5%). Use duration rule and duration rule + convexity. Which is a better predictor of price change?