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help!! FINAN 623 - Fall 2021 Problem Set #8 - Valuing Bonds Consider the following two bonds: Term Face Value Coupon Table 1: Two Bonds
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FINAN 623 - Fall 2021 Problem Set #8 - Valuing Bonds Consider the following two bonds: Term Face Value Coupon Table 1: Two Bonds Bond A Bond B 10 years 20 years 1000 1000 5% annual 3.5% semi-annual 1. Assume the market interest rate is 3.25%. Determine the price of each bond using excel functions. 2. Repeat #1 but setup a table of cash flows like in class and discount to find the prices of each bond. 3. Make a table comparing the bond prices when the market interest rate varies from 0%, 1%, ...,5%,6%... 12%. Graph both bond prices relative to market interest rates on the X-axis. 4. Which bond looks more price sensitive to changes in interest rates? Explain your answer using the graph from #2 Step by Step Solution
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