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Bond Valuation Years to maturity 1 5 Number of coupon payment per year 2 Coupon rate 7 % Par value $ 1 , 0 0
Bond Valuation
Years to maturity
Number of coupon payment per year
Coupon rate
Par value $
Current price $
Call price $
Years until bond is callable
a Calculating the bond's yield to maturity Formulas
Periodic YTM #NA
Annualized nominal YTM #NA
b Calculating the bond's current yield
Current yield #NA
c Calculating the bond's capital gain or loss yield
Capital gainloss yield #NA
d Calculating the bond's yield to call
Periodic YTC #NA
Annualized nominal YTC #NA
e Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate.
Conducting a sensitivity analysis of price to changes in the going market interest rate for the bond
Nominal market rate
Bond price if it's not called #NA
Bond price if it's called #NA
Formulas
"Nominal
market rate" Bond price if "Actual
bond price" "Nominal
market rate" Bond price if "Actual
bond price"
Not called Called Not called Called
C $ $C $ $
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
#NA #NA #NA
f Calculating the bond's yield
Settlement date today
Maturity date
Call date
Coupon rate
Par value of par value
Current price of par value
Call price of par value
Frequency semiannual bonds
Basis or day year
Yield to maturity #NA
Yield to call #NA Start with the partial model in the file Ch P Build a Model.xlsx A year, semiannual coupon bond with a par value of $ may be called in years at a call price of $ The bond sells for $Assume that the bond has just been issued.
The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.
Download spreadsheet Ch P Build a Modelbcbxlsx
What is the bond's yield to maturity? Round your answer to two decimal places.
fill in the blank
What is the bond's current yield? Round your answer to two decimal places.
fill in the blank
What is the bond's capital gain or loss yield? Round your answer to two decimal places. Use a minus sign to enter a negative value, if any.
fill in the blank
What is the bond's yield to call? Round your answer to two decimal places.
fill in the blank
How would the price of the bond be affected by a change in the going market interest rate? Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. This is an oversimplification, but assume it for purposes of this problem. Round your answers to the nearest cent.
Nominal market rate Actual bond price
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
$ fill in the blank
Now assume the date is October Assume further that a year bond was issued on July pays interest semiannually on January and July and sells for $ Again, it may be called in years from the date of issue at a call price of $ Use your spreadsheet to find the bond's yield. Round your answers to two decimal places.
Yield to maturity: fill in the blank
Yield to call: fill in the blank
Autos
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