Question

6. Use the following set of period-specific discount rates to price the following four annual coupon bonds with par values of $100. After calculating their prices, calculate their YTMs Year Rate (%) 0.25 0.50 0.75 Coupon Years to Bond Rate(%) Maturity 1.00 1.00 2.00 1.10 1.20 2.25 0.00 1.30 1.40

Answer 1

в 1 с 2 DI | | | $1.00 $1.00 0.25% 0.998 $0.998 $1.00 $100.00 $101.00 0.50% 0.995 $100.247 $101.244 0.374% A 1 Project A/Years 2 Par value 3 Coupon interest 4 Maturity value 5 Net cash flow 6 Interest rate 7 PV factor | 8 PV of cash flow 9 Price of Bond 10 Yield to Maturity 11 | 12 Project A/Years 13 Par value | 14 Coupon interest | 15 Maturity value | 16 Net cash flow 17 Interest rate 18 PV factor 19 PV of cash flow 20 Price of Bond 21 Yield to Maturity $2.00 $2.00 $2.00 $2.00 $2.00 0.25% 0.998 $1.995 $2.00 0.50% 0.995 $1.985 $2.00 0.75% 0.993 $1.970 $106.310 0.711% $2.00 1.00% 0.990 $1.951 $2.00 $100.00 $102.00 1.10% 0.989 $98.408 | 1070

B C | D | E | F | G | H I HH S 1 | 2 | 3 4 5 6 7 | 8 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 0.25% 0.998 $2.244 $2.25 0.50% 0.995 $2.233 $2.25 0.75% 0.993 $2.217 $2.25 1.00% 0.990 $2.195 $2.25 1.10% 0.989 $2.171 $2.25 1.20% 0.988 $2.15 $2.25 1.30% 0.987 $2.12 $2.25 $100.00 $102.25 1.40% 0.986 $94.90 | A 22 23 Project A/Years | 24 Par value | 25 Coupon interest | 26 Maturity value | 27 Net cash flow | 28 Interest rate | 29 PV factor | 30 PV of cash flow | 31 Price of Bond 32 Yield to Maturity 33 | 34 Project A/Years 35 Par value | 36 |Coupon interest 37 Maturity value 38 Net cash flow 39 Interest rate 40 PV factor | 41 PV of cash flow 42 Price of Bond 43 Yield to Maturity $110.222 0.919% $0.00 0.25% 0.998 $0.000 $0.00 0.50% 0.995 $0.000 $0.00 0.750 0.993 $0.000 $0.00 1.00% 0.990 $0.000 $0.00 1.10% 0.989 $0.000 1.20% 0.988 $0.00 $0.00 1.30% 0.987 $0.00 $100.00 $100.00 1.40% 0.986 $92.81 $92.812 0.937%

BC 2 1=1%C4 = 1%*C4 100 =SUM(B2:B4) = SUM(C2HC4) 0.0025 0.005 =1/(1+B6) =1/((1+C6)) =B5%B7 I=C5%B7C7 -B8+C8 =RATE(C1,-B3,B9,-C4,0) | 1 Project A/Years 1 2 Par value | 3 Coupon interest | 4 Maturity value | 5 Net cash flow 16 Interest rate | 7 PV factor | 8 PV of cash flow 9 Price of Bond 10 Yield to Maturity 11 12 Project A/Years 13 Par value 14 Coupon interest 15 Maturity value 16 Net cash flow 17 Interest rate | 18 PV factor | 19 PV of cash flow 20 Price of Bond 21 Yield to Maturity 1 2 3 4 5 -2%*F15 =B14 =C14 =D14 =E14 I-SUM(B13:B15) =SUM(C13:C15) -SUM(D13:015) -SUM(E 13:E 15) =SUM(F13:F15) 0.0025 0.005 0.0075 0.01 0.011 I=1/(1+B17) =1/((1+C17) =1/((1+017) |=1/((1+E17) =1/((1+F17) =B16 B18 |-C16 B18C18 =D16*B18*C18D18 |=E16B18 C18D18*E18 l=F16B18C18D18 E 18*F18 -SUMB19:F19) =RATE(F12,-B14,B20,-F15,0)

22 1 23 14 5 18 = 2.25% 126 =B25 I=C25 I=D25 =E25 =F25 =G25 =H25 100 =SUM(B24:B26) I=SUM(C24:C26) SUM(D 24:D26) =SUM(E24:E 26) I-SUM(F24:F26) |=SUM(G24:G26) =SUM(H24:H26) =SUM(124:126) 0.0025 0.005 0.0075 0.01 0.011 0.012 0.013 0.014 1=1/(1+B28) =1/((1+C28) =1/((1+028)) =1/((1+E28)) =1/((1+F28) =1/((1+G28) =1/((1+H28) =1/((1+128) =B27B29 =C27*B29*C29 =D27*B29*C29*D29=E 27*B29*C29*D29*E29 |=F27*B29*C29*D29*E29F29 =G27*B29*C29D29*E29F29*G29 =H27*B29*C29*D29*E29F29*G29H29 =12 7*B29*C29*D29%E29F29*G29*H29*129 =SUM(B30:130) =RATE (123,-B25,B31,-126,0 23 Project A/Years 24 Par value 25 Coupon interest 26 Maturity value 27 Net cash flow 28 Interest rate 29 PV factor 30 PV of cash flow 31 Price of Bond 32 Yield to Maturity 33 34 Project A/Years | 35 Par value | 36 Coupon interest | 37 Maturity value 38 Net cash flow 39 Interest rate | 40 PV factor 41 PV of cash flow 42 Price of Bond 43 Yield to Maturity 1 2 3 4 5 6 7 8 =SUM(B35:B37) ESUM(C35:237) I=SUM(D35:D37) SUM(E35:E37) =SUM(F35:F37) 0.00 25 0.005 0.0075 10.01 0.011 1=1/(1+B39) |=1/((1+C39)) =1/((1+D39)] =1/((1+E39)) =1/((1+F391) =B38%B40 =C38%B40*C40 =D38%B40*C40*D40 = 38%B40*C40D 40°E40 =F38%B40*C40*D40*E40F40 =SUM(B41:141) =RATE (134,-B36,B42,-137,0) 100 =SUM(G35:G37) =SUM(H35:H37) =SUM(135:137) 0.012 0.013 10.014 =1/((1+G39) =1/((1+H39) =1/((1+139)) =G38%B40*C40D 40 E40 F40*G40 =H38%B40*C40D 40*E40 F40*G40 H40 =138%B40*C 40*D40E 40*F40*G40*H40*140