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please show formula thank you. Do the following questions using Excel. Make sure you save your file. You will submit your Excel file under questions
please show formula thank you.
Do the following questions using Excel. Make sure you save your file. You will submit your Excel file under questions 5 when you have finished all 4 questions. Answer all 4 questions using one Excel file and submit that one Excel file under question 5. 1. XYZ Co has two types of bonds Bond A and Bond B. There are 1000 units of Bond A, each unit has $100 face value, 5% coupon rate with semi-annual payments, and 10 years to maturity. There are 2000 units of Bond B, each unit has $100 face value, 8% coupon rate with semi-annual payments, and 20 years to maturity. The risk-free rate is 3%, default risk premium for Bond A and Bond B is 2%, maturity risk premium for 10- year maturity is 1 % and for 20 year maturity is 1.5% a. Determine the required rate of return for Bond A and for Bond B. b. Determine the per unit value of Bond A and of Bond B. Are they premium bonds or discount bonds? Explain and discuss c. Determine the duration of Bond A and pf Bond B. Discuss the factors that affect the duration and how they affect the duration d. If the risk-free rate goes up from 3% to 4% due to inflation, what will be the rate of change in the value of Bond A and of Bond B? Which bond has a greater risk? ExplainStep by Step Solution
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