Question
Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following
Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds:
Bond A has an 11% annual coupon, matures in 12 years, and has a $1,000 face value.
Bond B has a 13% annual coupon, matures in 12 years, and has a $1,000 face value.
Bond C has a 9% annual coupon, matures in 12 years, and has a $1,000 face value.
Each bond has a yield to maturity of 11%.
Calculate the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant. Round your answers to the nearest cent.
| Years Remaining | ||||
| Until Maturity | Bond A | Bond B | Bond C | |
| 12 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 11 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 10 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 9 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 8 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 7 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 6 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 5 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 4 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 3 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 2 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 1 | $ fill in the blank | $ fill in the blank | $ fill in the blank | |
| 0 | $ 1000.00 | $ 1000.00 | $ 1000.00 |
What is the expected current yield for each bond in each year? Round your answers to two decimal places.
| Years Remaining | ||||
| Until Maturity | Bond A | Bond B | Bond C | |
| 12 | 11 % | fill in the blank % | fill in the blank % | |
| 11 | 11 % | fill in the blank % | fill in the blank % | |
| 10 | 11 % | fill in the blank % | fill in the blank % | |
| 9 | 11 % | fill in the blank % | fill in the blank % | |
| 8 | 11 % | fill in the blank % | fill in the blank % | |
| 7 | 11 % | fill in the blank % | fill in the blank % | |
| 6 | 11 % | fill in the blank % | fill in the blank % | |
| 5 | 11 % | fill in the blank % | fill in the blank % | |
| 4 | 11 % | fill in the blank % | fill in the blank % | |
| 3 | 11 % | fill in the blank % | fill in the blank % | |
| 2 | 11 % | fill in the blank % | fill in the blank % | |
| 1 | 11 % | fill in the blank % | fill in the blank % |
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Globalization Gating And Risk Finance
Authors: Unurjargal Nyambuu, Charles S. Tapiero
1st Edition
1119252652, 978-1119252658
