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Can someone please help me with parts D and E please. Thank you. BOND VALUATION Donald Trump is interested in investing some of his savings
Can someone please help me with parts D and E please. Thank you.
BOND VALUATION Donald Trump is interested in investing some of his savings in corporate bonds. He is considering the following bonds: Bond A has a 7% annual coupon, matures in 12 years, and has a $1,000 face value. Bond B has a 9% annual coupon, matures in 12 years, and has a $1,000 face value. Bond C has an 11% annual coupon, matures in 12 years, and has a $1,000 face value. . . Each bond has a yield to maturity of 9%. a. Before calculating the prices of the bonds, indicate whether each bond is trading ata premium, at a discount, or at par. b. Calculate the price of each of the three bonds. c. Calculate the current yield for each of the three bonds. d. If the yield to maturity for each bond remains at 9%, what will be the price of each bond 1 year from now? What is the expected capital gain yield for each bond? What is the expected total return for each bond? Donald is considering another bond, Bond D. It has an 8% semiannual coupon and a $1,000 face value (i.e., it pays a $40 coupon every 6 months). Bond D is scheduled to mature in 9 years and has a price of $1,150. It is also callable in 5 years at a call price of $1,040 (1) What is the bond's nominal yield to maturity? (2) What is the bond's nominal yield to call? (3) If Donald were to purchase this bond, would he be more likely to receive the yield e, to maturity or yield to call? Explain yourStep by Step Solution
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