Bond Valuation Years to maturity Number of coupon payment per year Coupon rate Par value Yield to maturity b. Calculating the price of each of the three bonds VB0 \begin{tabular}{crc} \hline Bond A & Bond B & \multicolumn{1}{c}{ Bond C } \\ \hline$1,000.00 & $928.39 & $1,071.61 \end{tabular} c. Calculating the current yield for each of the three bonds Current yield Bond A d. Calculating the price of each bond 1 year from now, the expected capital gains yield for each bond, and the expected total return for each bond Years to maturity Expected CG Yield Expected Total Return e. Mr. Clark is considering another bond, Bond D. Years to maturity Number of coupon payment per year Coupon rate Par value Coupon payment Current price Call price Years until bond is callable (1) Calculating the bond's nominal yield to maturity (2) Calculating the bond's nominal yield to call f. Determining which of the bonds has the most price risk and which has the most reinvestment risk Years to maturity Number of coupon payment per year Coupon rate Par value Price at YTM= Price at YTM= 9% % Price Change 10% Formulas Bond A =PV(0.09,12,90,1000) =90/1000 Formulas \#N/A \#N/A \begin{tabular}{|c|} \hline \\ \hline \\ \hline BondA \\ \#N/A \\ \#N/A A \\ \#N/A \\ \hline \end{tabular} \begin{tabular}{|l|} \hline \\ \hline \\ \hline \\ \hline \\ \hline \end{tabular} b. Calculate the price of each of the three bonds. Round your answers to the nearest cent. Price (Bond A): \$ Price (Bond B): \$ Price (Bond C): \$ c. Calculate the curre Numeric field ach of the three bonds. (Hint: The expected current yield is calculated as the annual interest divided by the price of the bond.) Round your answers to two decimal places. Current yield (Bond A ): % Current yield (Bond B): % Current yield (Bond C): % d. If the yield to maturity for each bond remains at 9%, what will be the price of each bond 1 year from now? Round your answers to the nearest cent. Price (Bond A): \$ Price (Bond B): \$ Price (Bond C): \$ What is the expected capital gains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. What is the expected capital gains yield for each bond? What is the expected total return for each bond? Round your answers to two decimal places. Mr. Clark is considering another bond, Bond D. It has a 7\% semiannual coupon and a $1,000 face value (i.e., it pays a $35 coupon every 6 months). Bond D is scheduled to mature in 7 years and has a price of $1,120. It is also callable in 5 years at a call price of $1,050. 1. What is the bond's nominal yield to maturity? Round your answer to two decimal places. % 2. What is the bond's nominal yield to call? Round your answer to two decimal places. % 3. If Mr. Clark were to purchase this bond, would he be more likely to receive the yield to maturity or yield to call? Explain your answer. Because the YTM is the YTC, Mr. Clark expect the bond to be called. Consequently, he would earn g. Calculate the price of each bond (A,B, and C) at the end of each year until maturity, assuming interest rates remain constant. Round your answers to the nearest cent. Create a graph showing the time path of each bond's value. Choose the correct graph. Years Remaining Until Maturity Bond C Bond A 1. What is the expected current yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 2. What is the expected capital gains yield for each bond in each year? Round your answers to two decimal places. 3. What is the total return for each bond in each year? Round your answers to two decimal places