Bond Valuation, economics homework help

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Hello!

  1. Using Excel, complete the following problems in your textbook:
    1. Bond Valuation: Problems 3, 6 and 10 on page 233
    2. Interest Rate Risk: Problems 19 and 20 on page 234
    3. Yield to Maturity & Rates of Return: Problems 12 and 21 on page 234

Please complete the above problems in the attached xls.

Thanks!

3Valuing Bonds [LO2]
Even though most corporate bonds in the United States make coupon
payments semiannually, bonds issued elsewhere often have annual coupon
payments. Suppose a German company issues a bond with a par value of
€1,000, 23 years to maturity, and a coupon rate of 5.8 percent paid
annually. If the yield to maturity is 4.7 percent, what is the current
price of the bond?

6Bond Prices LO2>
Sqeekers Co. issued 15-year bonds a year ago at a coupon rate of 4.1
percent. The bonds make semiannual payments and have a par value of
$1,000. If the YTM on these bonds is 4.5 percent, what is the current
bond price?

10Valuing Bonds [LO2]
Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon
rate of 4.9 percent paid semiannually and 13 years to maturity. The
yield to maturity of the bond is 3.8 percent. What is the price of the
bond?

19.Interest Rate Risk [LO2]
Both Bond Sam and Bond Dave have 6.5 percent coupons, make semiannual
payments, and are priced at par value. Bond Sam has 3 years to maturity,
whereas Bond Dave has 20 years to maturity. If interest rates suddenly
rise by 2 percent, what is the percentage change in the price of Bond
Sam? Of Bond Dave? If rates were to suddenly fall by 2 percent instead,
what would the percentage change in the price of Bond Sam be then? Of
Bond Dave? Illustrate your answers by graphing bond prices versus YTM.
What does this problem tell you about the interest rate risk of
longer-term bonds?

20. Interest Rate Risk [LO2]
Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9
percent. Both bonds have 19 years to maturity, make semiannual payments,
and have a YTM of 6 percent. If interest rates suddenly rise by 2
percent, what is the percentage price change of these bonds? What if
rates suddenly fall by 2 percent instead? What does this problem tell
you about the interest rate risk of lower-coupon bonds?

12.Calculating Real Rates of Return [LO4]
If Treasury bills are currently paying 5.1 percent and the inflation
rate is 2.2 percent, what is the approximate real rate of interest? The
exact real rate?

21.Bond Yields [LO2]
Bourdon Software has 6.4 percent coupon bonds on the market with 18
years to maturity. The bonds make semiannual payments and currently sell
for 106.8 percent of par. What is the current yield on the bonds? The
YTM? The effective annual yield?

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