Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsoft,

5

percent; GE Capital,

16

percent; and Morgan Stanley,

9.5

percent; where,

Please answer all of A

Here are data on 1,000 par vakie bonds issued by Microsoft, GE Capital and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questions: 1. Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsoft, 5 percent; GE Capital, 16 percent, and Morgan Stanley. 9.5 percent, where 0 b. The bonds are selling for the following amounts Microsoft $940 GE Capital $543 Morgan Stanley 5048 What are the expected rates of retum for each bond? c. How would the value of the bonds change (1) your required rate of retum () increased 2 percentage points or (2) decreased 2 percentage points? d. Explain the implications of your answers in part(e) in terms of interest rate risk, premium bonds, and discount bonds . Should you buy the bonds? Explain MICROSOFT GE CAPITAL MORGAN STANLEY Coupon interest rate 5.25% 7.00% 8.50% Years to maturity 25 23 12 (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.)