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 a 15% annual coupon, matures in 12 years, and has a $1,000 face value. Bond B has a 7% annual coupon, matures in 12 years, and has a $1,000 face value. Bond C has an 11% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yield to maturity of 11%. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Dortmund intermediate calculation. Use a to enter negative values, if any. If an answer is zero, enter "0". Download spreadsheet Bond Valuation-c636.xlsx a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par Bond A is selling at premium B Bond B is selling at a discount B Bond C is selling at par because its coupon rate is greater than B because its coupon rate is less than I the going interest rate. the going interest rate. because its coupon rate is equal to the going interest rate. Calculate the price of each of the three bonds. Round your answers to the nearest cent Expected total return 1.54% 0.00% 11.00 % 11.00% 11.00% e. Mr. Clark is considering another bond, Bond D. It has a 7% semiannual coupon and a $1,000 face value (ie., it pays a $35 coupon every 6 months). Bond D is scheduled to mature in 8 years and has a price of $1,140. It is also callable in 6 years at a call price of $1,080. 1. What is the bond's nominal yield to maturity? Round your answer to two decimal places, 2. What is the bond's nominal yield to call? Round your answer to two decimal places. % 3. If Mr. Clark were to purchase this bond, would he be more likely to receive the yield to maturity or yield to call? Explain your answer Because the YTM is B the YTC, Mr. Clark f. Explain briefly the difference between price risk and reinvestment risk. expect the bond to be called. Consequently, he would earn This risk of a decline in bond values due to an increase in interest rates is called Which of the following bonds has the most price risk? Which has the most reinvestment risk? A 1-year bond with an 11% annual coupon A 5-year bond with an 11% annual coupon A 5-year bond with a zero coupon A 10-year bond with an 11% annual coupon A 10-year bond with a zero coupon Bhas the most price risk. The risk of an income decline due to a drop in interest rates called f. Explain briefly the difference between price risk and reinvestment risk Con led Consequently, he would This risk of a decline in bond values due to an increase in interest rates is called Which of the following bonds has the most price risk? Which has the most reinvestment A 1-year bond with an 11% annual coupon A 5-year bond with an 11% annual coupon A 5-year bond with a zero coupon A 10-year bond with an 11% annual coupon A 10-year bond with a zero coupon B has the most price risk B has the most reinvestment risk The risk of an income decline due to a drop in interest rates is called 9. Calculate the price of each bond (A, B, and C) at the end of each year un maturity, assuming interest rates remain constant Round your answers to the nearest sant Years Remaining Until Maturity 12 Bond A Bond $ 11 $ 10 $ $ 1 9 $ B $ $ $ $ $ 1 $ $ $ $ $ $ Bond C Cinate a greah showing the time path of each bond's value. Choose the correct graph