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Can you answer (d).. please Homework for Chapter 10: Problem #1 in the text (Chapter 10) NOTE: PLEASE USE THE ATTACHED EXCEL FILE TITLED Homework
Can you answer (d).. please
Homework for Chapter 10: Problem #1 in the text (Chapter 10) NOTE: PLEASE USE THE ATTACHED EXCEL FILE TITLED "Homework for Chapter 10 Excel" TO SOLVE THE FOLLOWING PROBLEM. You are considering the following bonds to include in your portfolio: Price Face Value Coupon Rate Frequency Maturity (Years) Required Return Bond 1 Bond 2 Bond 3 $900.00 $1,100.00 $1.000.00 $1,000.00 $1,000.00 $1,000.00 7.00% 10.00% 19.00% 4 15 20 30 9.00% 8.00% 19.00% a) Determine the highest price you would be willing to pay for each of these bonds using the PV function. Also find whether the bond is undervalued, overvalued, or fairly valued (25 points). b) Determine the yield to maturity on these bonds using the RATE function assuming that you purchase them at the given price. Also calculate the current yield of each bond (25 points). c) Determine the yield to call of each bond using the Rate function if the time to first call and the call premium are the following (25 points): Bond A Bond B Bond C Call Premium % 3.00% 4.00% 5.00% Years to first call 5 4 3 d) Assume the following settlement dates for each bond: Bond 1 Bond 2 Bond 3 Settlement Date 1/1/2018 6/1/2018 9/1/2018 Use the PRICE and YIELD functions to recalculate your answers on parts (a), (b), and (C) (25 points)Step by Step Solution
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