Market rate of interest 4.90% Bonds (Four Parts, 30 points) Note that the semi-annual market rate of interest is 4.9% Bond face value Coupon rate Purchase date Maturity Last coupon date Next coupon date Bond A 1,000.00 11% 10-Sep-01 1-Aug-12 1-Aug-01 1-Aug-02 Bond B 1,000.00 9% 10-Sep-01 1-Aug-12 1-Aug-01 1-Feb-02 1) Create tables of the cash flows for the bonds. Find the prices of the bonds. 2) Find the yields on the bonds using XIRR and YIELD. 3) Are the results of XIRR and YIELD the same? Why or why not? Bond price Invoice price 4) Create a data table that shows how the bond prices vary with the interest rate. Plot the table. Does one bond appear more sensitive than another to YTM changes? Cash flow, Bond A Cash flow, Bond B Date Date Market rate of interest 4.90% Bonds (Four Parts, 30 points) Note that the semi-annual market rate of interest is 4.9% Bond face value Coupon rate Purchase date Maturity Last coupon date Next coupon date Bond A 1,000.00 11% 10-Sep-01 1-Aug-12 1-Aug-01 1-Aug-02 Bond B 1,000.00 9% 10-Sep-01 1-Aug-12 1-Aug-01 1-Feb-02 1) Create tables of the cash flows for the bonds. Find the prices of the bonds. 2) Find the yields on the bonds using XIRR and YIELD. 3) Are the results of XIRR and YIELD the same? Why or why not? Bond price Invoice price 4) Create a data table that shows how the bond prices vary with the interest rate. Plot the table. Does one bond appear more sensitive than another to YTM changes? Cash flow, Bond A Cash flow, Bond B Date Date