7-42 Spreadsheet Problem You have a portfolio of three bonds. The long bond will mature in 19 years and has a 5.5%coupon rate. The midterm bond matures in 9 years and has a 6.6% coupon rate. The short bond matures in only 2 years and has a4% coupon rate.a. Construct a spreadsheet that shows the value of these three bonds and the portfolio when the discount rate is 5%. Thespreadsheet can look something like this:ABDE1NowChange to2 Interest rate =5.00%5.50%3 BondsBond Price Now Price After Change Change in $ Change in %4 Long bond5 Midterm bond6 Short bond7Total =$0.00$0.00図 b. Illustrate what happens when the discount rate increases by 0.5%. What do you notice about the changes in price between thethree bonds?c. Show the bond prices when the discount rate decreases by 0.5% from the discount rate in part a. What do you notice about theprice change between parts b and c?

Bond price: Bond price is the present value of coupon amount and face value of the bond at a given…

7-42 Spreadsheet Problem You have a portfolio of three bonds. The long bond will mature in 19 years and has a 5.5% coupon rate. The midterm bond matures in 9 years and has a 6.6% coupon rate. The short bond matures in only 2 years and has a 4% coupon rate. a. Construct a spreadsheet that shows the value of these three bonds and the portfolio when the discount rate is 5%. The spreadsheet can look something like this: A E 1 Now Change to 2 Interest rate = 5.00% 5.50% 3 Bonds Bond Price Now Price After Change Change in $ Change in % 4 Long bond 5 Midterm bond 6 Short bond

7-42 Spreadsheet Problem You have a portfolio of three bonds. The long bond will mature in 19 years and has a 5.5% coupon rate. The midterm bond matures in 9 years and has a 6.6% coupon rate. The short bond matures in only 2 years and has a 4% coupon rate. a. Construct a spreadsheet that shows the value of these three bonds and the portfolio when the discount rate is 5%. The spreadsheet can look something like this: A E 1 Now Change to 2 Interest rate = 5.00% 5.50% 3 Bonds Bond Price Now Price After Change Change in $ Change in % 4 Long bond 5 Midterm bond 6 Short bond

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Problem 3 A discount bond offering an annual coupon rate of 9%, with interest paid annually, has a face value of $1,000. The difference between its yield to maturity and the coupon rate is 4%. The bond matures in 8 years. What is the price of the bond? Problem 4 Consider the following information for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk-free rate is 7%, and the Fund's assets are as follows. What is the Fund's required rate of return? Stock A: Investment = $200,000, b = 1.5, Stock B: Investment = $300,000, b ==-0.5 Stock C: Investment = $500,000, b = 1.25, Stock D: Investment = $1,000,000, b = 0.75
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Video Excel Online Structured Activity: Bond valuation An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 9.1%. Bond C pays a 10.5% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Assuming that the yield to maturity of each bond remains at 9.1% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 3 $ $ 2 $ 1 $ $ Check My Work Reset Problem
Excel Online Structured Activity: Bond valuation An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 9.4%. Bond C pays a 10% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Assuming that the yield to maturity of each bond remains at 9.4% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 $ fill in the blank? $ fill in the blank? 3 $ fill in the blank? $ fill in the blank? 2 $ fill in the blank? $ fill in the blank? 1 $ fill in the blank? $ fill in the blank? 0 $ fill in the blank? $ fill in the…
7
Problem 1 : You are given the following information: The price of a 6% coupon bond maturing in 6 months is $99.40 The price of a 10% coupon bond maturing in 1 year is $102.90 The price of a 12% coupon bond maturing in 2 years is $105 The price of a 15% coupon bond maturing in 2 years is $108 a) b) c) d) explain why. Find a 6-month spot rate Find 1-year spot rate ) Find 2-year spot rate: Can you find the price of a 10% coupon bond maturing 2 years from now? If yes, find it. If no,
QUESTION 1 You purchase a bond that pays a semi-annual coupon with a coupon rate of 1.4%. The bond current yield is 7.3% and has a par value of $1,000. What is the price? (Round to the nearest cent.)
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Video Excel Online Structured Activity: Bond valuation An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.2%. Bond C pays a 11.5% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet Assuming that the yield to maturity of each bond remains at 8.2% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 3 2 1 0 Check My Work LA जी A SA AA Reset Problem ta tA ta $ tA
Pls provide step by step answer
Can you please walk me through this? Problem 6-11 DEFAULT RISK PREMIUM A company’s 5-year bonds are yielding 7.75% per year. Treasury bonds with the same maturity are yielding 5 2% per year, and the real risk-free rate (r*) is 2.3%. The average inflation premium is 2 5%; and the maturity risk premium is estimated to be 0.1 x (t 1) %, where t = number of years to maturity. If the liquidity premium is 1%, what is the default risk premium on the corporate bonds?
31 ation An 8%, 8-year bond pays annual coupons and has 6 years to maturity. If the market interest rate is 9%, calculate the price of this bond. Show the (abbreviated) time line, the key entries/steps of FCS, and the (abbreviated) equation/expression of NS. Typing tips:

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