f. Determining which of the bonds has the most price risk and which has the most...
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f. Determining which of the bonds has the most price risk and which has the most reinvestment risk Bond 1 Bond 2 Bond 3 Bond 4 Bond 5 Years to maturity 1 5 5 10 10 Number of coupon payment per year Coupon rate 1 1 1 Par value 10% $1,000 10% $1,000 10% $1,000 $1,000 $1,000 Price at YTM = Price at YTM = 10% 11% % Price Change g. Calculating the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant Years Remaining Until Maturity 12 11 10 9 7 6 5 4 3 2 1 0 Bond A Creating a graph showing the time path of each bond's value Bond B Bond C Bond 1 Bond 2 Bond 3 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Bond A Bond B Bond C #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A f. Determining which of the bonds has the most price risk and which has the most reinvestment risk Bond 1 Bond 2 Bond 3 Bond 4 Bond 5 Years to maturity 1 5 5 10 10 Number of coupon payment per year Coupon rate 1 1 1 Par value 10% $1,000 10% $1,000 10% $1,000 $1,000 $1,000 Price at YTM = Price at YTM = 10% 11% % Price Change g. Calculating the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant Years Remaining Until Maturity 12 11 10 9 7 6 5 4 3 2 1 0 Bond A Creating a graph showing the time path of each bond's value Bond B Bond C Bond 1 Bond 2 Bond 3 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Bond A Bond B Bond C #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
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Investments Analysis And Management
ISBN: 9781118975589
13th Edition
Authors: Charles P. Jones, Gerald R. Jensen
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