Please solve the question as mentioned in the sample question above

1-dt-content-rid-22992532 1/courses/210026288/Assignment%20%202%281%29.pdf 15 Instructions: You are required to use a financial calculator or spreadsheet (Excel) to solve 10 problems (provided on page 3) related to the risk and return, stocks and bonds valuation. You are required to show the following 3 steps for each problem (sample questions and solutions are provided for guidance) (0) Describe and interpret the assumptions related to the problem. (11) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem. Sample Questions and Solutions Sample Question : A company has an issue of 12-year bonds that pay 3% interest, annually. Further assume that today's required rate of retum on these bonds is 7%. How much would these bonds sell for today? Round off to the nearest Sl. Solution The problem assumes that the face value of the bond is S1000. The bond will pay an annual coupon or S ue, coupon or intere amount of SSO is assumed to paid every year. It also assumes that investors currently required a return of 7% on investments with similar risk characteristics. The use of bond valuation concept is appropriate to calculate the true value of these bonds. The accuracy of the solution depends on the correctness of the assumptions on face value, coupon payments and required rate of retum assumption The use of bond valuation concept which suggests that the true value of a bond is the present value of its future coupon and face value discounted al investors required rate of return is appropriate le calculate the true value of these bonds. We are required to compute the present value (PV) which represents the true value of the bond. rii). V $1000, PMT=$50, Rale Value of the Bond 5811S 79N-12 years Compute PV5841.15 Consider a 9-year bond with face value $1,000 that pays an 8.8% coupon semi-annually and has a yield-to-maturity of 6.5%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to decrease by 0.60% per year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?)