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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 7% 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 9%. g. 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. Bond A Bond B Bond C Years Remaining Until Maturity 12 11 $ $ $ $ $ $ $ $ 10 $ $ $ 9 $ $ $ 8 $ $ 7 $ $ 6 $ $ $ $ $ $ 5 $ $ 4 $ $ $ $ $ $ $ M N O 1 $ $ $ $ $ 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. Years Remaining Until Maturity Bond B 12 % 11 Bond A Bond C % % % % % 10 % % % 9 % % % 8 % % % 7 % % % 6 % % % 5 % % % 4 % % % 3 % % % 2 % % % 1 % % % 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. Bond A Bond B Bond C Years Remaining Until Maturity 12 11 % % % % % % 10 % % % 9 % % % 8 % % % 7 % % % 6 % % % 5 % % % 4 % % % 3 % % % 2 % % % 1 % % % 3. What is the total return 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 % % % % % % 10 % % % 9 % % % 8 % % % 7 % % % 6 % % % 5 % % % 4 % % % % % % M N % % % 1 % % %
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