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Suppose a bond has a face value of $1,000, an annual coupon rate of 3.5%, and a yield to maturity of 2.8% (quoted as an

  1. Suppose a bond has a face value of $1,000, an annual coupon rate of 3.5%, and a yield to maturity of 2.8% (quoted as an APR). The bond makes four coupon payments per year with 12 periods to maturity (or 3 years to maturity). What is the price of this bond based on the APR convention?
    • Be sure to calculate bond price using 1) the Discounted Cash Flow Formula, 2) Excel PV Function, 3) Excel NPV Function, and 4) Excel PRICE function
  2. Suppose a bond has a face value of $1,000, has an annual coupon rate of 3.5%, and makes 2 coupon payments per year over 40 periods to maturity (or 20 years to maturity). The market price of the bond is $1,052.34. What is the YTM of this bond?
  3. Plot the relation between bond price and YTM using Excel Scatterplot chart function. Assume a coupon rate of 3%, 50 years to maturity, annual coupon payments, and $100 face value. Plot the graph using YTM from 1% to 20% using 1% increment.
  4. Compute Macaulay Duration and Modified Duration for a bond that has a face value of $1,000, an annual coupon rate of 3.5%, and a yield to maturity of 6.0% (quoted as an APR). The bond makes four coupon payments per year with 12 periods to maturity (or 3 years to maturity).

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