Financial Planning & Control (PMBA 5373) Bond Valuation and Yield-to-Maturity Homework #10, 10 points due 5:30 p.m. on 10/4/21 Assume that you are considering an investment in a corporate bond with the following characteristics: Par value Coupon rate Payment schedule Maturity date $1,000 5% per year semiannual (June 1 and December 1) December 1, 2033 The bond's current market value is 98.40 (that is, 98.40% of par value). For this bond, assume a required rate of return equal to 6.0% per year. 1. draw a timeline showing the cash flows for this bond; and 2. calculate the bond value based on the required rate of return; and 3. calculate the yield-to-maturity based on the current market price. Now, answer each of the following questions concerning the bond: Is the bond selling at a premium or a discount? How do you know? 4. A B Is the bond value greater than par, equal to par, or less than par? Why is that the case? C. Is the bond yield-to-maturity greater than coupon, equal to coupon, or less than coupon? Why is that the case? Given the required rate of return equal to 6.0% per year, would you invest in this bond? Why or why not? D