Excel Activity: Bond Valuation Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bands. 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 B has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. a Bond Chas an 8% annual coupon, matures in 12 years, and has a $1,000 face value Ench band has a yield to maturity of 9 The dots has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questioed btlow. Do not found intermediate calculation. We a minus son to enter negative values, if any, it on anwer is zero, entero" Download Soradohet Bord Yunton XXX a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par Dond A is selling because it coupon rates the going interest rate Bond selling because it coupon rates the going interest rate Bond Cis selling at becauses coupon rates the going interest rate b. Calculate the price of each of the three bonda Round your answers to the nearest cent Pryce (Bond Alis 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): Calculate the current yield for each of the three bonds. (Hint: The expected current yield is calculated as the annual interest divided by the price of the bond) Round your answers to the decimal places Current yield (Bond A): Current yield (Bond B): Current yield (ond C): d the yield to matunty for each bond remains to what will be the price of each bond 1 year from now? Round your answers to the nearest cent Price (Bond) Pyke (Bond) Price (Bond C) 5 Bond A Bond B Bond C 14 Expected capital gains yield Expected total return 5 % 10 e. Mr. Clark is considering another bond, Bond D. It has a 6% semiannual coupon and a $1,000 face value (ie, it pays a 530 coupon every 6 months) Bonds scheduled to mature in 9 years and has a price of $1,100. It is also callable in 5 years at a call price of 51,030, 1. What is the bond's nominal yield to matunty? Round your answer to two decimal places 2. What is the bond' nominal yield to call Round your answer to two decimal places 3.1 Mi Clark were to purchase this bond, would be be more likely to receive the yield to matunty or yield to call? Explain your answer Because the YTM the YTC, Mi Clark v expect the bond to be called. Consequently, he would earn Explain briefly the difference between pick and revestment is Thisk of a decline in bond values due to an increase interest rates is called The risk of an income decine due to a drop in interest rates is called This risk of a decline in bond values due to an increase in interest rates is called The risk of an income decline due to a drop in interest rates is called Which of the following bonds has the most price riskWhich has the most reinvestment risk? A1 year bond with a 9% annual coupon A 5-year bond with a 9% annual coupon A 5 year bond with a zero coupon A 10year bond with a 9% annual coupon A 10 year bond with a rero coupon A has the most price risk has the most reinvestment risk 9. 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 12 Bond Bond A 5 $ Bond $ $ 11 $ $ 10 S 3 $ 3 $ $ 5 $ 5 $ 5 $ 5 5 4 $ $ 3 $ 5 $ $ $ $ 2 $ $ 1 $ $ $ 0 5 $ Create a graph showing the time path of each bond's value. Choose the correct graph The correct graphis A Tim Paths of Boods And C 3 51.400 Time Path of Bonde A, B, modo $1,400 51,200 $1,200 $1.000 $1.000 3100 5800 WA Banda 5600 5600 3400 5400 5200 $200 Back Next c Time Paths of Beads A, B, and C D Time Paths of Boods A Band C $1,400 $1,400 $1,200 $1,200 $1,000 $1,000 5800 3800 Bunda Band Valu 5600 5600 $400 5400 5300 5200 SO 13 50 12 Years Rema Ushil May Boud Years Remaining Maturity Bond Bood Bood Bond A Bond 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 A 12 Bond B Bond C % % % 11 % % % 10 % % % 9 % % 8 % % % 7 % % % 6 9% % % 5 % 9% % 4 %6 % 9% 3 % % % 2 % % 1 % % % 2. What is the expected capital gains 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 % % % 10 % % % 9 % % % 8 96 % % 7 9 9% % 6 % % 5 % % 96 4 % % % 3 % % % 2 % % 1 % % % Years Remaining Until Maturity 12 Bond A Bond B Bond c % % 11 % % % 10 % % % 9 % % % 8 % % % 7 % % % % % % % % % % % % 3 % % % % % % % % Excel Activity: Bond Valuation Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bands. 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 B has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. a Bond Chas an 8% annual coupon, matures in 12 years, and has a $1,000 face value Ench band has a yield to maturity of 9 The dots has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questioed btlow. Do not found intermediate calculation. We a minus son to enter negative values, if any, it on anwer is zero, entero" Download Soradohet Bord Yunton XXX a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par Dond A is selling because it coupon rates the going interest rate Bond selling because it coupon rates the going interest rate Bond Cis selling at becauses coupon rates the going interest rate b. Calculate the price of each of the three bonda Round your answers to the nearest cent Pryce (Bond Alis 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): Calculate the current yield for each of the three bonds. (Hint: The expected current yield is calculated as the annual interest divided by the price of the bond) Round your answers to the decimal places Current yield (Bond A): Current yield (Bond B): Current yield (ond C): d the yield to matunty for each bond remains to what will be the price of each bond 1 year from now? Round your answers to the nearest cent Price (Bond) Pyke (Bond) Price (Bond C) 5 Bond A Bond B Bond C 14 Expected capital gains yield Expected total return 5 % 10 e. Mr. Clark is considering another bond, Bond D. It has a 6% semiannual coupon and a $1,000 face value (ie, it pays a 530 coupon every 6 months) Bonds scheduled to mature in 9 years and has a price of $1,100. It is also callable in 5 years at a call price of 51,030, 1. What is the bond's nominal yield to matunty? Round your answer to two decimal places 2. What is the bond' nominal yield to call Round your answer to two decimal places 3.1 Mi Clark were to purchase this bond, would be be more likely to receive the yield to matunty or yield to call? Explain your answer Because the YTM the YTC, Mi Clark v expect the bond to be called. Consequently, he would earn Explain briefly the difference between pick and revestment is Thisk of a decline in bond values due to an increase interest rates is called The risk of an income decine due to a drop in interest rates is called This risk of a decline in bond values due to an increase in interest rates is called The risk of an income decline due to a drop in interest rates is called Which of the following bonds has the most price riskWhich has the most reinvestment risk? A1 year bond with a 9% annual coupon A 5-year bond with a 9% annual coupon A 5 year bond with a zero coupon A 10year bond with a 9% annual coupon A 10 year bond with a rero coupon A has the most price risk has the most reinvestment risk 9. 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 12 Bond Bond A 5 $ Bond $ $ 11 $ $ 10 S 3 $ 3 $ $ 5 $ 5 $ 5 $ 5 5 4 $ $ 3 $ 5 $ $ $ $ 2 $ $ 1 $ $ $ 0 5 $ Create a graph showing the time path of each bond's value. Choose the correct graph The correct graphis A Tim Paths of Boods And C 3 51.400 Time Path of Bonde A, B, modo $1,400 51,200 $1,200 $1.000 $1.000 3100 5800 WA Banda 5600 5600 3400 5400 5200 $200 Back Next c Time Paths of Beads A, B, and C D Time Paths of Boods A Band C $1,400 $1,400 $1,200 $1,200 $1,000 $1,000 5800 3800 Bunda Band Valu 5600 5600 $400 5400 5300 5200 SO 13 50 12 Years Rema Ushil May Boud Years Remaining Maturity Bond Bood Bood Bond A Bond 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 A 12 Bond B Bond C % % % 11 % % % 10 % % % 9 % % 8 % % % 7 % % % 6 9% % % 5 % 9% % 4 %6 % 9% 3 % % % 2 % % 1 % % % 2. What is the expected capital gains 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 % % % 10 % % % 9 % % % 8 96 % % 7 9 9% % 6 % % 5 % % 96 4 % % % 3 % % % 2 % % 1 % % % Years Remaining Until Maturity 12 Bond A Bond B Bond c % % 11 % % % 10 % % % 9 % % % 8 % % % 7 % % % % % % % % % % % % 3 % % % % % % % %