Consider two 30-year maturity bonds. Bond A has a coupon rate of 4%, while bond B...

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Consider two 30-year maturity bonds. Bond A has a coupon rate of 4%, while bond B has a coupon rate of 12%. Both bonds pay their coupons semiannually. a. Compute the prices of the two bonds (using Excel's bond price function) at each interest rate. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Yield 2% Price A Price B 1,449.55 3,247.75 b. Suppose Bond A is currently priced to offer a yield to maturity of 8%. Calculate the (percentage) capital gain or loss on the bond if its yield immediately changes to each value in yield to maturity. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Yield 2% Capital Gain or Loss (Percentage) % Consider two 30-year maturity bonds. Bond A has a coupon rate of 4%, while bond B has a coupon rate of 12%. Both bonds pay their coupons semiannually. a. Compute the prices of the two bonds (using Excel's bond price function) at each interest rate. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Yield 2% Price A Price B 1,449.55 3,247.75 b. Suppose Bond A is currently priced to offer a yield to maturity of 8%. Calculate the (percentage) capital gain or loss on the bond if its yield immediately changes to each value in yield to maturity. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Yield 2% Capital Gain or Loss (Percentage) %

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To compute the prices of the two bonds at each interest rate we can use Excel... View the full answer