Excel Activity: Bond Valuation Start with the partial model in the file Ch04 P24 Build a Model.xlsx. A 25-year, 6% semiannual coupon bond with a par value of $1,000 may be called in 8 years at a call price of $1,020. The bond sells for $1,190. (Assume that the bond has just been issued.) The data has been collected in the Microsoft Excel file below. Downioad the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch04 P24 Bulld a Model-7c4e6e.xl5x a. What is the bond's yield to maturity? Round your answer to two decimal places. b. What is the bond's current yield? Round your answer to two decimal places. c. What is the bond's capital gain or loss yield? Round your answer to two decimal places. Use a minus sign to enter a negative value, if any. % d. What is the bond's yield to call? Round your answer to two decimal places. % e. How would the price of the bond be affected by a change in the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.) Round your answers to the nearest cent. c. What is the bond's capital gain or loss yield? Round your answer to two decimal places. Use a minus sign to enter a negative value, if any. % d. What is the bond's yield to call? Round your answer to two decimal places. % e. How would the price of the bond be affected by a change in the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest fallis below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.) Round your answers to the nearest cent. f. Now assume the date is October 25,2020 . Assume further that an 11%, 15 -year bond was issued on July 1, 2020, pays interest semiannually (on January 1 and July 1), and sells for $1,190. Again, it may be called in 8 years from the date of issue at a call price of $1,020. Use your spreadsheet to find the bond's yield. Round your answers to two decimal places. Yield to maturity: % Yield to call: % Excel Activity: Bond Valuation Start with the partial model in the file Ch04 P24 Build a Model.xlsx. A 25-year, 6% semiannual coupon bond with a par value of $1,000 may be called in 8 years at a call price of $1,020. The bond sells for $1,190. (Assume that the bond has just been issued.) The data has been collected in the Microsoft Excel file below. Downioad the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch04 P24 Bulld a Model-7c4e6e.xl5x a. What is the bond's yield to maturity? Round your answer to two decimal places. b. What is the bond's current yield? Round your answer to two decimal places. c. What is the bond's capital gain or loss yield? Round your answer to two decimal places. Use a minus sign to enter a negative value, if any. % d. What is the bond's yield to call? Round your answer to two decimal places. % e. How would the price of the bond be affected by a change in the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.) Round your answers to the nearest cent. c. What is the bond's capital gain or loss yield? Round your answer to two decimal places. Use a minus sign to enter a negative value, if any. % d. What is the bond's yield to call? Round your answer to two decimal places. % e. How would the price of the bond be affected by a change in the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest fallis below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.) Round your answers to the nearest cent. f. Now assume the date is October 25,2020 . Assume further that an 11%, 15 -year bond was issued on July 1, 2020, pays interest semiannually (on January 1 and July 1), and sells for $1,190. Again, it may be called in 8 years from the date of issue at a call price of $1,020. Use your spreadsheet to find the bond's yield. Round your answers to two decimal places. Yield to maturity: % Yield to call: %
