Question
You May Use Excel BUT PLEASE SHOW ALL WORK ! Complete ALL parts for thumbs up. Thanks! The company has an obligation and is paying
You May Use Excel BUT PLEASE SHOW ALL WORK! Complete ALL parts for thumbs up. Thanks!
The company has an obligation and is paying a single payment debt in 12 years.
| Debt (obligation paid 12 years) | $13,000,000.00 |
| Rate | Maturity (in years) | Price | YTM | Coupon Freq | |
| Bond 1 | 8% | 10 | 1,000 | .075 | Semi-Annual |
| Bond 2 | 6% | 20 | 800 | .075 | Semi-Annual |
| Bond 3 | 4% | 30 | 600 | .075 | Semi-Annual |
A) Find the Macauly Duration for each bond
B) Calculate the PV of Obligation
C) Pick 2 bonds and apply the immunization process using the given YTM. Find the quantity of each of the 2 bonds to achieve the obligation.
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The New CFO Financial Leadership Manual
Authors: Steven M. Bragg
3rd Edition
0470882565, 978-0470882566
