Question
You are considering an investment in two different bonds.One bond matures in nine years and has a face value of $1,000.The bond pays an annual
You are considering an investment in two different bonds.One bond matures in nine years and has a face value of $1,000.The bond pays an annual coupon of 3% and has a 4.5% yield to maturity.The other bond is an 8-year zero coupon bond with a face value of $1,000 and has a yield to maturity of 4.5%. Please solve using excel and indicate which excel formulas you use to solve. Upload any related attachments
a.What is the price of each bond?
b.What is the duration of each bond?
c.If the yield to maturity of each bond were to immediately increase to 7.5%, what would be the percentage change (including the correct sign) in the price of each bond (from the price found in part a)?
d.If the yield to maturity of each bond were to immediately decrease to 2%, what would be the percentage change (including the correct sign) in the price of each bond (from the price found in part a)?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
16th edition
125927716X, 978-1259687969, 1259687961, 978-1259277160
