Cifford Clark is a recent cetiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds - Bond A has a 9% annual coupon, matures in 12 years, and has a $1.000 face value. - Bond 8 has a 746 annual coupon, matures in 12 years, and has a $1,000 face value. - Bond C has an 8% annual coupon, matures in 12 vears, and has a 51,000 face value. Fach bond has a veld to maturity of 6 s. The data has been collected in the Micosoft focel file below. Domiload the spreadsheet and perform the required analysis fo ananer the questipns belom. Do not round intermediate calculations, Use a minus sign to enter negative values, if any. If an answer is zero, enter " 0 ". X a. Eefore cakpelating the noices at the bonds, indicate whether each bond is trading at a premium, at a discount, or at par. Hond A is selling at because its coupen rate is the going interest rate. Eond B is selline at because its coupon rate ia the going interest rate. Bond Cis anking at because at coupen rate is the going interest rate. c. Calculate the current yield far each of the these bonds. (thint: The expected current yield is calculated as the annual interest divided by the price of the bond.) Round your answers to two decimat places. Current vield (Bond A)t Cuerent yield (Bond B) Gurrent rield (Bond C)+ Drice (Eond A) is s Drice (Eand a) is Price (Band ch) s 1. What is the bonife ngminal vield to malyrity? Reund vour anyer ta the decimal places. 3. If Mr. Clark were to purchase this bond, would he be more likely to receive the veld to maturity or yeld to call? Ecplain your ansures. Because the YrTh is the ric, Mr. Clark expect the band to be called, Consequently, he would earn 5. Doplain briefly the difference between price risk and reinvestment riak. This risk of a deeline in bond values doe to an increase in interest rates is called The rak of an income decline duen to a drop in interest rates is called Which of the following bonds has the moat prife risk? Which has the movt reimventment risk? - A t-vear bond wah an aw annual coupon - A strear bond whi an tis annual coupon - A syear bond with a zeco coupon * A 10-vear bond weth an eh arnual coupon - A 10-vear bond with a ters coupon has the most price rak: hos the most reinvertment risk cent. 1. What is the expected current yeid for each bond in each vear? Round your answers to two decimal places. 2. What is the expected copital gains vield for each bond in each year? Round vour antwers tie two decimal giaces. 3. What is the total return for each bond in each year? Found your anumers to two decimal place
