Let's assume that we observe the following two bonds issued by Zebra Inc. BOND A: Zebra Inc 1) Compute the missing value (either Price, or Yield) for bonds and B, respectively. Coupon Rate 5.120% Payment Frequency Semi-Annual Maturity Date 5/25/43 Credit Rating AA Callable No 2) If the market-driven yields for all bonds rise 1.50 percentage along with US market interest rate level, will these two bonds' prices rise or drop? What will be the rates of return (i.e., % gain or loss) for the prices of Bonds A and B, respectively? Last Trade Price ?????? (relative to par 100) Last Trade Yield 4.725% Last Trade Date 10/1/20 3) If the market-driven yields for all bonds drop 1.50 percentage along with US market interest rate level, will these two bonds' prices rise or drop? What will be the rates of return (i.e., % gain or loss) for the prices of Bonds A and B, respectively? BOND B: Zebra Inc 4) Out of these two bonds A and B, which one carries a greater interest rate risk? What specific bond feature(s) could have caused this bond to carry a greater interest rate risk? If you become uncertain about the future movement direction of US market interest rate (i.e., unsure whether the interest rate will rise or fall in the future), what investment strategy shall you undertake about these two bonds? Coupon Rate 7.350% Payment Frequency Semi-Annual Maturity Date 9/10/33 Credit Rating AA Callable No PS: To answer the above questions, you are required to apply Excel finance functions such as PRICE and YIELD whenever applicable. Or there will be heavy deductions for failing to show -ne such required learnings.).) Last Trade Price 132.60 (relative to par 100) Last Trade Yield ?????? Last Trade Date 10/5/20 Let's assume that we observe the following two bonds issued by Zebra Inc. BOND A: Zebra Inc 1) Compute the missing value (either Price, or Yield) for bonds and B, respectively. Coupon Rate 5.120% Payment Frequency Semi-Annual Maturity Date 5/25/43 Credit Rating AA Callable No 2) If the market-driven yields for all bonds rise 1.50 percentage along with US market interest rate level, will these two bonds' prices rise or drop? What will be the rates of return (i.e., % gain or loss) for the prices of Bonds A and B, respectively? Last Trade Price ?????? (relative to par 100) Last Trade Yield 4.725% Last Trade Date 10/1/20 3) If the market-driven yields for all bonds drop 1.50 percentage along with US market interest rate level, will these two bonds' prices rise or drop? What will be the rates of return (i.e., % gain or loss) for the prices of Bonds A and B, respectively? BOND B: Zebra Inc 4) Out of these two bonds A and B, which one carries a greater interest rate risk? What specific bond feature(s) could have caused this bond to carry a greater interest rate risk? If you become uncertain about the future movement direction of US market interest rate (i.e., unsure whether the interest rate will rise or fall in the future), what investment strategy shall you undertake about these two bonds? Coupon Rate 7.350% Payment Frequency Semi-Annual Maturity Date 9/10/33 Credit Rating AA Callable No PS: To answer the above questions, you are required to apply Excel finance functions such as PRICE and YIELD whenever applicable. Or there will be heavy deductions for failing to show -ne such required learnings.).) Last Trade Price 132.60 (relative to par 100) Last Trade Yield ?????? Last Trade Date 10/5/20
