QUESTION 6 Matur ity (year 1 2 3 A. O $114.51 B.O $113.45 C. O $112.508 D. O Spot rate (%) $120.54 1.25 1.50 19 1.70 491 1-year Forward rate (%) 2-years from now 1.908 Using the spot rates, what would be the value of an option-free bond that pays 6% annual coupon? Par value is $100. 0-years from now 1.25 1-year from now 1.75 Cash flow $3 $3 $103
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- a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.Maturity (years) Spot rate (%) 1-year Forward rate (%) 0-years from now 1.25 1-year from now 1.75 2-years from now 1.908 Cash flow $3 $3 $103 1 1.25 2 1.5019 1.70491 Using the same information above, what is the price of the bond if it is callable at Par one year and two years from now at zero volatility? O A. $106.6914 B. $104.6914 OC. $102.6914 OD. $114.6914Question 8 Maturity (years) 1 1-year Forward rate (%) 0-years from now 1.25 1-year from now 1.75 2-years from now 1.908 2 3 Using the same information above, what is the price of the bond if it is callable at Par one year and two years from now at zero volatility? Spot rate (%) 1.25 1.5019 1.70491 Cash flow $3 $3 $103
- Maturity (years) Price O 1.44% 2.88% O 0.08% 1 O 5.76% 2 $94.53 3 $91.83 4 $97.25 $89.23 The above table shows the price per $100 face value of several risk-free, zero- coupon bonds. What is the yield to maturity of the three-year, zero-coupon, risk-free bond shown? LO 5 $87.53Maturity (years) Price 1 $97.25 $94 53 591 83 5 $87.53 $09 23 The above table shows the price per $100 face value of several risk-free, zero-coupon bonds. What is the yield to maturity of the four-year, zero-coupon, risk free bond shown? OA. 011% OB 2.00% OC. 144% OD 578 %2. Find the value (price) of a 3 year bond with a par value of $100 and coupon rate of 5% per annum that pays interest annually assuming that the appropriatye discount rate (yield to maturity) is 10% year pv 1 2 3 total a. 87.57 b. 89.82 c. 90.11 d. 91.85 e. none
- K Using the formula given below: F-P P if the market price of a $1,000-face-value discount bond changes from $925 to $950, the yield to maturity decreases by%. (Round your response to two decimal places.) Rbonds =Consider the following two Treasury securities: Bond Price Modified duration (years) A $100 6 B $80 7 For a 25 basis-point change in interest rates, what is the percentage change in price for Bond A? A. -2.00% B. -1.50% C. 3.00% D. 3.50%K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {
- Given only the information provided, which bond would you suspect of experiencing the largest change in price if interest rates change? Coupon Current Price Remaining Term Bond A 5% $ 703.11 20 years Bond B 7% $ 932.05 10 years Bond C 11% $ 1,078.63 3 years Bond D 11% $ 1,296.89 20 years Question 19 options: Bond A Bond B Bond C Bond DQ.Consider a $1,000 bond with a 6.0 coupon that matures in two years. Coupon payments are made semiannually. The current yield-to-maturity is 5.0. Calculate the convexity of the bond. Possible Options A. 4.08 B. 4.17 C. 4.29 D. 4.35 E. 4.49Thank You
