Question
Can someone please help with this? The first question has two parts. The calculations for the current yield need to be in excel with the
Can someone please help with this? The first question has two parts. The calculations for the current yield need to be in excel with the formulas. Please let me know i you have any questions.
Note: The Settlement Dates for these issues is Thursday, January 26, 2017.
Bond |
Coupon | Maturity |
Asked | Ask Yield | Years to maturity |
1 | 3.500 | 2018 Feb 15 | 102.7188 | 0.895 | 1 |
2 | 5.250 | 2029 Feb 15 |
| 2.607 | 12 |
3 | 2.500 | 2046 Feb 15 | 88.3672 | 3.110 | 29 |
1. For each of the Treasury bonds and notes listed above, calculate the current yield (based on the asked price) and show how it differs from the yield to maturity.
When is the current yield a good approximation of the yield to maturity?
When answering questions 2,assume you bought each of these bonds today at the stated, asked price.
2. Suppose you purchased the above three bonds at the prices listed above on February 15, 2017. In addition, assume it is now 1 year later (February15, 2018) and you want to sell these bonds. If interest rates were to increase by one-half a percentage point (50 basis points) over the year, at what price would you be selling these bonds for? If interest rates were to increase by a full percentage point (100 basis points), at what price would you sell these bonds for?
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