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Here are data on $1,000 par value bonds issued by Microsot, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer

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Here are data on \$1,000 par value bonds issued by Microsot, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questons: a. Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsott, 3 percent; GE Capital, 7.5 percent; and Morgan Stanley, 13 percent; where: b. The bonds are solling for the following amounts: What are the expected rates of retum for each bond? c. How would the value of the bonds change if (1) your required rate of retum (Vb) increased 2 percentage points or (2) decreased 2 percentage points? d. Explain the implications of your answers in part e in terms of interest rate risk, premium bonds, and discount bonds. e. Shnuld veu hiv the honds? Frnlain a. If your required rate of retum on the Microsoft bond is 3 percent, what is the value of the bond? s. (Round to the nearest cent.) Data table (Click on the following icon o, in order to copy its consents into a spreadsheet) Here are data on \$1,000 par value bonds issued by Microsot, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questons: a. Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsott, 3 percent; GE Capital, 7.5 percent; and Morgan Stanley, 13 percent; where: b. The bonds are solling for the following amounts: What are the expected rates of retum for each bond? c. How would the value of the bonds change if (1) your required rate of retum (Vb) increased 2 percentage points or (2) decreased 2 percentage points? d. Explain the implications of your answers in part e in terms of interest rate risk, premium bonds, and discount bonds. e. Shnuld veu hiv the honds? Frnlain a. If your required rate of retum on the Microsoft bond is 3 percent, what is the value of the bond? s. (Round to the nearest cent.) Data table (Click on the following icon o, in order to copy its consents into a spreadsheet)

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