Question

1.
A:
Bond Value=PV(5%,5,-15%*1000,-1000)=1432.94767

Current yield=15%*1000/PV(5%,5,-15%*1000,-1000)=10.468%

2.
B:
Bond Value=PV(15%,5,-15%*1000,-1000)=\$1,000.000

Current yield=15%*1000/PV(15%,5,-15%*1000,-1000)=15.000%

3.
C:
Bond Value=PV(15.6%,5,-15%*1000,-1000)=\$980.170

Current yield=15%*1000/PV(15.6%,5,-15%*1000,-1000)=15.303%

4.
is equal to, =

5.
is equal to

6.
is lower than, <

7.
is lower than

8.
is greater than, >

9.
is greater than

10.
Bond B

11.
The probability of default is zero

12.
YTM:
=RATE(18,9%*1000,-950.35,1000)
=9.59%

YTC:
=RATE(8,9%*1000,-950.35,1000)
=9.93%

13.
18 years

14.
9.59%

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