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Bond A Bond B Bond C 5% coupon bond, 3.75% coupon bond, 3.2% coupon bond, 1-year maturity 2-year maturity 3-year maturity Settlement date (when purchased)
Bond A | Bond B | Bond C | |||
5% coupon bond, | 3.75% coupon bond, | 3.2% coupon bond, | |||
1-year maturity | 2-year maturity | 3-year maturity | |||
Settlement date (when purchased) | 10/3/23 | 10/3/23 | 10/3/23 | ||
Maturity date | 10/3/24 | 10/3/25 | 10/3/26 | ||
Annual coupon rate | 0.05 | 0.0375 | 0.032 | ||
Yield to maturity | 0.03 | 0.031 | 0.032 | ||
Face Value | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | ||
Redemption (as % of Face Value) | 100 | 100 | 100 | ||
Coupon payments per year | 1 | 1 | 1 | ||
1. Describe all cash flows (in future values) these three bonds will pay in Year 1 to Year 3 in the table. | |||||
Bond A | Bond B | Bond C | |||
Year 1 Cash Flow | $ 1,050.00 | $ 37.50 | $ 32.00 | ||
Year 2 Cash Flow | $ - | $ 1,037.50 | $ 32.00 | ||
Year 3 Cash Flow | $ - | $ - | $ | ||
2. Compute the present value for all cash flows (individually) for the three bonds. | |||||
Bond A | Bond B | Bond C | |||
PV of Year 1 Cash Flow | |||||
PV of Year 2 Cash Flow | |||||
PV of Year 3 Cash Flow | |||||
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