Question: Bond Pricer: Construct an Excel spread-sheet that uses the input variables below (you may assume realistic values of your choice): Trade date Spot rate curve

Bond Pricer: Construct an Excel spread-sheet that uses the input variables below (you may assume realistic values of your choice): Trade date Spot rate curve Coupon rate Coupon frequency (semi-annual or annual) Maturity (up to 10 years) Current price (a) Compute the Yield to Maturity (YtM). You may use the built-in excel function to calculate the YtM.

(b) Verify the accuracy of the YtM computed in (a) by recalculating the bond price as a sum of discounted cash-flows (i.e. using the arbitrage-free valuation approach). Notes: You may assume the spot rate curve provided (see, SpotRateCurves.xls) or a spot rate curve of your choice by downloading a curve from Reuters (or Bloomberg or any other data provider) or assuming realistic values. Hint: It would be easier to use a curve with data points every 6 months, i.e., 6m, 1y, 1.5y, 2y, ..., 10y.

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