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Please help and show work. Thank you! Glifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds.
Please help and show work. Thank you!
Glifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds: - Bond A has a 696 annual coupon, matures in 12 yecars, and has a 11,000 face value. - Bond B has a 10\% annual coupon, matures in 12 years, and has a 51,000 face value. - Bond C has an 8% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yleid to maturity of 8%. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the requirnd analyus to answer the questions belaw. Do not round intermediate calculations. Use a minus sign to enter negotive values, if any. If an answer is zero, eriter "0*. Downlood spreadsheet Bond Valuation-e09814 x/5x a. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par. Bond A is seling at because its coupon rate is the going interest rate. Bond B is selling at: behaase its coupon rate is the going interest rate. Bond C is selling at because its coupen rate is the going interest rate. b. Calculate the price of each of the three bonds. Round your answers to the nearest cent. Price (BondA):$ Price ( Bond B):$5 Price (Bond C): 5 C. Calculate the current yield for each of the three bonds. (Hint The expected current yield is caiculated as the annual interest divided by the price of the bond.) Round your answers to two decimal places. Current yield (Bond A): Current yield (Bond B): Current yield (Bond C): d. If the yield to maturity for each bond remains at 8%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A): $ Price (Bond B): 5 Price (Bond C): $ What is the expected capital gains yleid for each bond? What is the expected total return for each bond? Round your answers to two decimal places. e. Mr. Clark is considering another bond, Bond D. It has an 8% semiannual coupon and a $1,000 face value fl.e., it pays a $40 coupon every 6 months). Bond D is scheduled to mature in 6 years and has a price of $1,160. It is aiso callable in 4 years at a call price of $1,070. 1. What is the bond's nominal yleld to maturity? Round your answer to two decimal places. 2. What is the bond's nominal yield to call? Round your answer to two decimal places. % Step by Step Solution
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