Find the price of bonds under current ytm

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Reference no: EM132953461

Create an Excel File to answer the following questions:

1. A bond has a 5% coupon rate, and matures in 18 years, and has par value $1000. Find the price of the bond today if the yield to maturity is 4% first assuming annual payments, then again with semi-annual.

2. What is the yield to maturity on a semiannual bond with a 9% coupon rate, $1000 par value, and 3 years to maturity if the price of the bond today is $800?

3. Consider two bonds, both with a current YTM of 3.6%. The first pays no coupon (Cr=0%) and matures in 26 years. The second pays an 8% coupon annually and matures in 4 years.

a) Find the price of both bonds under the current YTM of 3.6%

b) Find the price of both bonds if yields drop to 3.3% and the % change in price

c) Find the price of both bonds if yields rise to 3.9% and the % change in price

d) Which bond has more interest rate risk?

Reference no: EM132953461

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