Chapter 7. Solution to End-of-Chapter Comprehensive/Spreadsheet Problem 3 Problem 7-19 5 Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His 6 financial planner has suggested the following bonds 8 Bond A has a 7% annual coupon matures in 12 years, and has a $1,000 face value. 9 Bond B has a 9% annual coupon matures in 12 years, and has a $1,000 face value. 10 Bond Chas an 11% annual coupon, matures in 12 years, and has a $1,000 face value. 11 Each bond has a yield to maturity of 9%. 13 a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount 14 or at par 16 17 18 19 20 21 23 24 b. Calculate the price of each of the three bonds 26 Basic Input Data Bond A Bond B Bond C 12 12 12 27 Years to maturity 1 1 1 28 Periods per year 12 12 12 29 Periods to maturity 30 Coupon rate 7% 9% 11% $1,000 31 Par value $1,000 $1,000 $110 32 Periodic payment $70 $90 9% 33 Yield to maturity 9% 9% 34 35 V 36 c. Calculate the current yield for each of the three bonds. (Hint: Refer to Footnote 7 for the definition of the current 07