How many bonds should geely issue if it chooses bond b

Reference no: EM133290954

Geely, a motor company, plans to raise SKR 10 million (or equivalent in other currencies) to acquire Volvo, a Swedish firm. Therefore, Geely decides to issue foreign bonds and has the following two options:

Bond A: 3-year USD coupon bond with face value of US1000; coupon rate = 5% p.a. paid annually; exchange rate = USD 0.09/SKR; yield-to-maturity (YTM) is 6% p.a.
Bond B: 3-year EUR coupon bond with face value of EUR1000; coupon rate = 6% p.a. paid annually; exchange rate = EUR 0.10/SKR; yield-to-maturity (YTM) is 5.5% p.a.

Q1. How many bonds should Geely issue if it chooses Bond B?

Q2. please design a spreadsheet using the Goal-seek function only in Excel to solve for the yield to maturity (p.a.) for the following bond issue:

5-year GBP coupon bond with a face value of GBP1000; coupon rate = 7% p.a. paid annually; upfront fees of 5.5%.

What is the yield to maturity in four decimal points?

Reference no: EM133290954

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