Bond Valuation

*I am more concerned with Part 2; not too sure how to enter into Excel; thank you!*

Assume that a 25-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100 (assume that the bond has just been issued). Employ the excel file to answer the following questions:

Part 1: Bond Yield

A) Calculate the Periods to Maturity, Periodic Payment, and Periods until Callable (10 Points)

B) Calculate the periodic Yield to Maturity using the Excel function and the Annualized Yield to Maturity. The Annualized Yield is equal to the periodic YTM times the number of periods (10 Points)

C) Calculate the Annual Coupon Payment, Current Price, and the Current Yield. The current yield is defined as Annual Coupon payment/Current Price (10 Point)

D) Calculate the Capital Gain or Loss Yield. Capital Gain or Loss Yield = Annualized YTM - Current Yield (10 Points)

E) Calculate the Periodic Yield to Call using the Excel function and the Annualized Yield to Call (10 Points)

Part 2: Relation between Bond Value and Market Interest Rate

F) Calculate the Bond Value using the Excel function and create a bond value table (be sure to fill in the table) for different interest rates using the Excel function (10 Points)

G) Graph the actual bond value considering call likelihood (y-axis) against the annual market interest rate (x-axis). Label the y-axis, x-axis, and chart title (10 Points)

Part 1:
A) Basic Input Data
	Basic Input Data:
	Years to maturity:	25		Hint: N
	Periods per year:	2		Hint: M
	Periods to maturity:	50		Hint: (N)(M)
	Coupon rate:	8%
	Par value:	$1,000
	Periodic payment:	$20		Hint: Annual coupon payment / M
	Current price	$1,100
	Call price:	$1,040
	Years until callable:	5
	Periods until callable:	10		Hint: (Years to call)(M)
B) Yield to Maturity
	Number of periods	Payment	Present Value	Future Value
	50	$40.00	-$1,100.00	$1,000.00		(See https://support.office.com/en-US/article/rate-function-8fd73bd6-7981-4eb1-985c-22c218240756)
	Peridodic YTM =	3.57%		Hint: Employ the function "=Rate(nper,pmt,-pv,fv)"
	Annualized YTM =	7.14%		Hint: (Periodic YTM)(M)
C) Current Yield
	Annual Coupon Payment =	$80
	Current Price =	($110,000)
	Current yield =	-0.07%		Hint: Annual Coupon payment/Current Price
D) Capital Gain or Loss Yield
	Annualized YTM =	7.14%
	Current Yield =	-0.07%
	Capital Gain or Loss yield =	7.21%		Hint: Capital Gain or Loss Yield = Annualized YTM - Current Yield
E) Yield to Call
	Number of periods	Payment	Present Value	Future Value
	50	$40.00	-$1,100.00	$1,000.00		(See https://support.office.com/en-US/article/rate-function-8fd73bd6-7981-4eb1-985c-22c218240756)
	Peridodic YTC =	1.70%		Hint: Employ the function "=Rate(nper,pmt,-pv,fv)"
	Annualized YTC =	3.40%		Hint: (Periodic YTC)(M)
Part 2)
F) Bond Value
	Annual Market Rate:	8%
	Periodic Market Rate:	4%		Hint: Periodic interest rate = Annual market rate / M
	Rate	Number of periods	Payment	Future Value
	8%	50	$40.00	$1,000.00
	Value of bond if it's not called:	$510.66		Hint: Employ the function "PV(rate, nper, -pmt, -fv)"
	Rate	Number of periods	Payment	Future Value
	4%	50	$40.00	$1,000.00
	Value of bond if it's called:	$1,000.00		Hint: Employ the function "PV(rate, nper, -pmt, -fv)"
			Number of periods if Bond			Future Value of Bond if		PV Value of Bond if
	Annual Market Rate	Periodic Market Rate	Not Called	Called	Periodic Payment	Not Called	Called	Not Called
	0%					$1,000	$1,040
	2%					$1,000	$1,040
	4%					$1,000	$1,040
	6%					$1,000	$1,040
	8%					$1,000	$1,040
	10%					$1,000	$1,040
	12%					$1,000	$1,040
	14%					$1,000	$1,040
	16%					$1,000	$1,040
G) Graph