Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Note that the market rate of interest is 4.8% pleas show formulas thanks :) 1) Create tables of the cash flows for these two bonds
Note that the market rate of interest is 4.8%
pleas show formulas thanks :)
1) Create tables of the cash flows for these two bonds A & B.
2) Find the bond price and invoice price of these two bonds, A & B.
3) Find the YTM on the bonds using XIRR.
4) Create a data table that shows how the bond prices vary with the interest rate (0% to 20%).
5) Plot the bond prices of A & B vs interets rat
Interest Bond A Bond B \begin{tabular}{|r|} \hline 0% \\ \hline 1% \\ \hline 2% \\ \hline 3% \\ \hline 4% \\ \hline 5% \\ \hline 6% \\ \hline 7% \\ \hline 8% \\ \hline 9% \\ \hline 10% \\ \hline 11% \\ \hline 12% \\ \hline 13% \\ \hline 14% \\ \hline 15% \\ \hline 16% \\ \hline 17% \\ \hline 18% \\ \hline 19% \\ \hline 20% \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|} \hline & Bond A & & \multicolumn{1}{|c|}{ Bond B } & \multicolumn{2}{|c|}{ Market rate of interest } \\ \hline 3ond face value & 1,000.00 & 1,000.00 & 4.80% \\ \hline Coupon rate & 11% & 9% & \\ \hline Prchase date & 10 Oct-01 & 1 Aug-12 & 1 Act-01 & \\ \hline Maturity & 1 Aug-01 & 1 Aug-01 & & \\ \hline ast coupon date & 1 Aug-02 & 1Feb02 & \\ \hline Vext coupon date & & & \\ \hline \end{tabular} Bond price nvoice price Interest Bond A Bond B \begin{tabular}{|r|} \hline 0% \\ \hline 1% \\ \hline 2% \\ \hline 3% \\ \hline 4% \\ \hline 5% \\ \hline 6% \\ \hline 7% \\ \hline 8% \\ \hline 9% \\ \hline 10% \\ \hline 11% \\ \hline 12% \\ \hline 13% \\ \hline 14% \\ \hline 15% \\ \hline 16% \\ \hline 17% \\ \hline 18% \\ \hline 19% \\ \hline 20% \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|} \hline & Bond A & & \multicolumn{1}{|c|}{ Bond B } & \multicolumn{2}{|c|}{ Market rate of interest } \\ \hline 3ond face value & 1,000.00 & 1,000.00 & 4.80% \\ \hline Coupon rate & 11% & 9% & \\ \hline Prchase date & 10 Oct-01 & 1 Aug-12 & 1 Act-01 & \\ \hline Maturity & 1 Aug-01 & 1 Aug-01 & & \\ \hline ast coupon date & 1 Aug-02 & 1Feb02 & \\ \hline Vext coupon date & & & \\ \hline \end{tabular} Bond price nvoice priceStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started