PLEASE HELP ME SOLVE PART C, D, and, E on excel and show the steps to do,I HAD THE ANSWER FOR PART A AND B IN CASE YOU NEED INFORMATION FROM THESE TWO PART
THANK YOU VERY MUCH
Part A What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required return is 11.5%? Part B (1) What is the value of a 13% coupon bond that is otherwise identical to the bond described in part A? Would we now have a discount or a premium bond? (2) What is the value of a 7% coupon bond with these characteristics? Would we now have a discount or a premium bond? (3) What would happen to the values of the 7%, 10%, and 13% coupon bonds over time if the required return remained at 11.5%? Part C (1) What is the yield to maturity on a 10-year, 10.5% annual coupon, $1,000 par value bond that sells for $887.00 (a)? That sells for $1,134.20 (b)? (2) What are the total return, the current yield, and the capital gains yield for the discount bond? Assume that it is held to maturity and the company does not default on it. Part D How does the equation for valuing a bond change if semiannual payments are made? Find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd = 14.5%. Part E Suppose for $1,000 you could buy a 11.5%, 10-year, annual payment bond or a 11.5%, 10- year, semiannual payment bond. They are equally risky. Which would you prefer? If $1,000 is the proper price for the semiannual bond, what is the equilibrium price for the annual payment bond? AC AF AB AD AE 1 Part-A: Part-C 2 Years to maturity 10 Years to maturity 10 3 Par value 1000 Par value 1000 4 Required return 11.50% Coupon 10.50% 5 Coupon 10% 6 1) 7 Value $ 913.48 Price $ 887.00 8 9 Part-B : a) 10 Coupon rate 13% Yield 12.54% 11 12 Value $ 1,086.52 b) 13 Price 1134.2 14 Value is More than $1000 so It is a 15 Premium Bond Yield 8.46% 16 17 2) 2) 18 Coupon rate 7% Price after One Year $ 893.27 19 20 Value $ 740.45 Current Yield 11.84% 21 Capital gains Yield 0.71% 22 Value is Less than $1000 so It is a Total return 12.54% 23 Discount Bond 24 25 3) 26 Value of 7%, 10% Coupon Bonds Increase Over time and 27 value of 13% Coupon bond Decrease Over time Part A What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required return is 11.5%? Part B (1) What is the value of a 13% coupon bond that is otherwise identical to the bond described in part A? Would we now have a discount or a premium bond? (2) What is the value of a 7% coupon bond with these characteristics? Would we now have a discount or a premium bond? (3) What would happen to the values of the 7%, 10%, and 13% coupon bonds over time if the required return remained at 11.5%? Part C (1) What is the yield to maturity on a 10-year, 10.5% annual coupon, $1,000 par value bond that sells for $887.00 (a)? That sells for $1,134.20 (b)? (2) What are the total return, the current yield, and the capital gains yield for the discount bond? Assume that it is held to maturity and the company does not default on it. Part D How does the equation for valuing a bond change if semiannual payments are made? Find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd = 14.5%. Part E Suppose for $1,000 you could buy a 11.5%, 10-year, annual payment bond or a 11.5%, 10- year, semiannual payment bond. They are equally risky. Which would you prefer? If $1,000 is the proper price for the semiannual bond, what is the equilibrium price for the annual payment bond? AC AF AB AD AE 1 Part-A: Part-C 2 Years to maturity 10 Years to maturity 10 3 Par value 1000 Par value 1000 4 Required return 11.50% Coupon 10.50% 5 Coupon 10% 6 1) 7 Value $ 913.48 Price $ 887.00 8 9 Part-B : a) 10 Coupon rate 13% Yield 12.54% 11 12 Value $ 1,086.52 b) 13 Price 1134.2 14 Value is More than $1000 so It is a 15 Premium Bond Yield 8.46% 16 17 2) 2) 18 Coupon rate 7% Price after One Year $ 893.27 19 20 Value $ 740.45 Current Yield 11.84% 21 Capital gains Yield 0.71% 22 Value is Less than $1000 so It is a Total return 12.54% 23 Discount Bond 24 25 3) 26 Value of 7%, 10% Coupon Bonds Increase Over time and 27 value of 13% Coupon bond Decrease Over time
