Question: Q2 - Please help with the following practice exam. Prof provided the answer key but REQUIRES showing the solution/analysis using Excel functions/formulas STEP-BY-STEP. Thank you.

Q2 - Please help with the following practice exam. Prof provided the answer key but REQUIRES showing the solution/analysis using Excel functions/formulas STEP-BY-STEP. Thank you.

AnswerKey:

Any bond that sells at par has a YTM equal to the coupon rate. Current yield = Annual coupon payment/Price.

Question:

a) What is the relationship between the price of a bond and its YTM? b) Explain why some bonds sell at a premium over par value while other bonds sell at a discount. What do you know about the relationship between the coupon rate and the YTM for premium bonds? What about for discount bonds? For bonds selling at par value? c) What is the relationship between the current yield and YTM for premium bonds? For discount bonds? For bonds selling at par value?

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