x A Bond Price Movements - Excel ? 5 FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In X Arial 12 AA % Paste B IU- A- Cells Editing Alignment Number Conditional Format as Cell Formatting Table Styles Styles Clipboard Font E16 v X fx B C D E F G H 1 2 3 4 Bond X is a premium bond making semiannual payments. The bond pays a 9 percent coupon, has a YTM of 7 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a 7 percent coupon, has a YTM of 9 percent, and also has 13 years to maturity. What is the dollar price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In three years? In eight years? In 12 years? 5 6 7 8 9 10 11 12 Bond X: Coupon rate Yield to maturity Settlement date Maturity date Maturity date Maturity date Maturity date Maturity date 9% 7% 1/1/2000 1/1/2013 1/1/2012 1/1/2010 1/1/2005 1/1/2001 13 14 15 16 17 18 Redemption (% of par) # of coupons per year 100 2 19 20 Sheet1 e READY HE E + 100% Attempt(s) Hint Show Me Redemption (% of par) # of coupons per year 100 2 Bond Y: Coupon rate Yield to maturity 7% 9% X Arial 12 A A % Paste BIU- Alignment Number Cells Editing * Conditional Format as Cell Formatting Table Styles Styles Clipboard Font E16 for A B D E TI F G H 1 27 28 29 30 31 Price of Bond X Maturity (years) 13 12 10 5 32 33 34 35 1 36 37 38 39 40 41 Price of Bond Y Maturity (years) 13 12 10 5 1 42 43 44 45 46 47 48