Suppose that investors are considering bond investments using the following bonds: Bond 1 Bond 2 Bond 3 Market Price $850.00 $1,050.00 $1,000.00 Face Value $1,000.00 $1,000.00 $1,000.00 Coupon Rate 6.00% 11.00% 9.00% Frequency 1 2 4 Maturity (Years) 15 20 30 Required Return 9.00% 8.00% 9.00% 1) Using the PV function, calculate the price you would be willing to pay for each of these bonds and assess the mispricing of the bonds (undervalued/fairly valued/overvalued). 2) Calculate the yield to maturity on these bonds using the RATE function. Assume that investors purchase these bonds at the given prices shown in the table. 3) Based on 1) and 2), calculate the current yield of each bond. 4) Suppose that the above bonds are callable, and the first call dates and premia are as follows: Bond A Bond B Bond C Call Premium % 4.00% 5.00% 6.00% Years to first call 5 4 3 Calculate the yield to call for each bond.

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