Question: 1. Enter the information below in the input table for Bond A and Bond B: Bond Bond A Bond B Coupon Rate 6% 12% YTM
1. Enter the information below in the input table for Bond A and Bond B: Bond Bond A Bond B Coupon Rate 6% 12% YTM 12% 6% Face Value $5,000 $5,000 2. Enter Years to Maturity from 30 down to 0, decreasing one year at a time. 3. Calculate the bond price for each of the two bonds above for each year to maturity using the PV function. You may use data tables here, too--but its not required. 4. Plot the bond prices in a scatter plot, with years to maturity (think time to maturity) on the X axis and bond price on the Y axis. This is the classic drawing youve seen in all your Finance textbooks as the bond approaches maturity its price approaches par value, and the price changes at an increasing rate, if the yield to maturity stays the same for the life of the bond. ? Be sure to format your chart appropriately (include axis labels, properly formatted axis values, legend, and applicable title) ? Reverse your x-axis valuesit makes the chart more intuitive and similar to those seen in textbooks! Heres how: i. Select the x-axis, right-click on it, then choose format axis. Under axis options there is an option for values in reverse order. Select this box. ii. Optional: You may also choose to put the vertical axis back on the left side of the chart. To do so, select the x-axis, right-click on it, then choose format axis. Under axis options select vertical axis crosses at maximum axis value.
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