Excel Activity: Bond Valuation 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 12% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond B has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond C has an 8% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yield to maturity of 10%. Use a minus sign to enter negative values, if any. If an answer is zero, enter "0". b. Calculate the price of each of the three bonds. Round your answers to the nearest cent. Price (Bond A): \$ Price (Bond B): \$ Price (Bond C): \$ decimal places. Current yield (Bond A): Current yield (Bond B): Current yield (Bond C): If the yield to maturity for each bond remains at 10%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A): $ Price (Bond B): \$ Price (Bond C): \$ What is the expected capital gains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. 1 I years and has a price of $1,160. It is also callable in 4 years at a call price of $1,070. 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. \%o 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. 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bond in each year? Round your answers to two decimal places. and the expected total retum for sach band 0. Wr, Clark is constriering snother hond. Bond D (1) Caleulatioj the bnd's nominal yiold to maturity Fonnulas (2) Caleulatioj the bfula nominal yiold to call AN:R Excel Activity Bond valuation Cifford Cark is a recent retree who is interested in investing some of his savings in corporme bonds. His famcal planner tus wagetted the following bonds - Bond A has a 12% areual coupon, mutures in 12 years, and has a $1,000 race velue. - 6ons B has a 10% armual coupon, matures in 12 years, and tiss a 51,000 face value - Bond C has an 8% annual covpon, matures in 12 years, and has a 51,000 face value. Each bond has a yeld to maturity of 10%. Uve a minus sign to enter negative values, if any, If an antaer is zeco, entiee 0. Dennised soreddreet Dond yalvatien-2406ic. visx a. Before caiculating the prices of the bonds, indieate whether eaden bond is trasing at a preminy at a discount, of at par. b. Calculate the price of each of the theee bends. Hound your answens to the neareut tent. Price (bond A) 1 / Frice (bond B) : 8 Price ( Bond C) 13 . decimal places. Cuerent yleld (Bend A): current yeld (bond b): Current yield (tond C) : 6. If the yeld to maturity for each bond remains at 104, what wil be the price of each bend 1 year from now2 found your answen to the nearest cent: Price (Bond A ) =5 Price (Bondb)=5 Price (Bond C): $ What is the expected copital gains yield for each bond? What is the expected tocal return for each bend? Round your answers to two decimal plsces e. Mr. Clark is corsidering another bond, 8cod 0 . It has an 8% semiannual coupon and a $1,000 face value fi.e, it pays a f40 coupan every 6 months). Bond 0 is scheduled to mature in 6 years and has a price of $1,160. 1t is also callable in 4 years at 9 call price of $1,070. 1. What is the bonds nominal yield to maturity? Round your anwer 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 theigbond, would he be more likely to receive the yield to maturity or vield to call? Exploin your answer. Because the rim is expect the bond to be called. Consequentiv. he would eam t. Explain briefly the oifference between price risk and reinvestment risk. This risk of a dectine in bond values due to an increase in interest rates is caled . The risk of an income decline due to a drop in interest rates is called Which of the following bends has the most price risk? WWich has the most reinvestment risk? - A 1-year bond with a 104 annual coupen - A 5 year bond with a 10% annual coupon - A 5-year bond with a zero coupon - A 10-year bond with a 10% annual coupon. 5) has the most reicwestment risk. 9. Ceiculate the price of each bond (A, B, and C) at the end of esch year until maturity, assuming interest rates remain canstant. Round your ansiers to the nearest cent. Create a graph showing the time path of each bond's value, choose the correct graph, The correct graph is 1. What is the expected current yieid for each bond in each year? Rlound your answers to two declenal places. 2. What is the expected capital gains yield for each bond in each year? pound your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bond in each year? Round your answers to two decimal places. Excel Activity: Bond Valuation 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 12% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond B has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. - Bond C has an 8% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yield to maturity of 10%. Use a minus sign to enter negative values, if any. If an answer is zero, enter "0". b. Calculate the price of each of the three bonds. Round your answers to the nearest cent. Price (Bond A): \$ Price (Bond B): \$ Price (Bond C): \$ decimal places. Current yield (Bond A): Current yield (Bond B): Current yield (Bond C): If the yield to maturity for each bond remains at 10%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A): $ Price (Bond B): \$ Price (Bond C): \$ What is the expected capital gains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. 1 I years and has a price of $1,160. It is also callable in 4 years at a call price of $1,070. 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. \%o 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. 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bond in each year? Round your answers to two decimal places. and the expected total retum for sach band 0. Wr, Clark is constriering snother hond. Bond D (1) Caleulatioj the bnd's nominal yiold to maturity Fonnulas (2) Caleulatioj the bfula nominal yiold to call AN:R Excel Activity Bond valuation Cifford Cark is a recent retree who is interested in investing some of his savings in corporme bonds. His famcal planner tus wagetted the following bonds - Bond A has a 12% areual coupon, mutures in 12 years, and has a $1,000 race velue. - 6ons B has a 10% armual coupon, matures in 12 years, and tiss a 51,000 face value - Bond C has an 8% annual covpon, matures in 12 years, and has a 51,000 face value. Each bond has a yeld to maturity of 10%. Uve a minus sign to enter negative values, if any, If an antaer is zeco, entiee 0. Dennised soreddreet Dond yalvatien-2406ic. visx a. Before caiculating the prices of the bonds, indieate whether eaden bond is trasing at a preminy at a discount, of at par. b. Calculate the price of each of the theee bends. Hound your answens to the neareut tent. Price (bond A) 1 / Frice (bond B) : 8 Price ( Bond C) 13 . decimal places. Cuerent yleld (Bend A): current yeld (bond b): Current yield (tond C) : 6. If the yeld to maturity for each bond remains at 104, what wil be the price of each bend 1 year from now2 found your answen to the nearest cent: Price (Bond A ) =5 Price (Bondb)=5 Price (Bond C): $ What is the expected copital gains yield for each bond? What is the expected tocal return for each bend? Round your answers to two decimal plsces e. Mr. Clark is corsidering another bond, 8cod 0 . It has an 8% semiannual coupon and a $1,000 face value fi.e, it pays a f40 coupan every 6 months). Bond 0 is scheduled to mature in 6 years and has a price of $1,160. 1t is also callable in 4 years at 9 call price of $1,070. 1. What is the bonds nominal yield to maturity? Round your anwer 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 theigbond, would he be more likely to receive the yield to maturity or vield to call? Exploin your answer. Because the rim is expect the bond to be called. Consequentiv. he would eam t. Explain briefly the oifference between price risk and reinvestment risk. This risk of a dectine in bond values due to an increase in interest rates is caled . The risk of an income decline due to a drop in interest rates is called Which of the following bends has the most price risk? WWich has the most reinvestment risk? - A 1-year bond with a 104 annual coupen - A 5 year bond with a 10% annual coupon - A 5-year bond with a zero coupon - A 10-year bond with a 10% annual coupon. 5) has the most reicwestment risk. 9. Ceiculate the price of each bond (A, B, and C) at the end of esch year until maturity, assuming interest rates remain canstant. Round your ansiers to the nearest cent. Create a graph showing the time path of each bond's value, choose the correct graph, The correct graph is 1. What is the expected current yieid for each bond in each year? Rlound your answers to two declenal places. 2. What is the expected capital gains yield for each bond in each year? pound your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bond in each year? Round your answers to two decimal places