Question: can it be done on excel ? E1) Trinity, Inc. has the following bonds outstanding currently. For the analysis, assume that it is now January
E1) Trinity, Inc. has the following bonds outstanding currently. For the analysis, assume that it is now January 1, 2019 and each of the bonds listed below mature on December 31 of the year listed. Please take all yield computations to at least 4 decimal digits Par Value Maturity Year Bond Coupon Rate $1000 $1000 $1000 1 7.5% 2032 2 8.25% 2029 6.0% 2023 Assuming that the bonds pay annual coupon, estimate the market value of each bond at a) a discount rate of 7.4% Assuming that the bonds pay annual coupon, what will happen to the price of each bond if market interest rates suddenly decrease from 7.4% to 6.2%? Which of the three bonds will have the greatest percentage change in price? b) Assuming that the bonds pay annual coupon, what will happen to the price of each bond if market interest rates suddenly increase from 7.4% to 8.6%? Which of the three bonds will have the greatest percentage change in price? c) d) Assume that each bond pays annual coupon. Also, the bonds are currently trading in the market at $973.63, S932.37, and S1075.58 respectively. What is the yield-to-maturity of each bond? e) Assume that each bond pays annual coupon. Suppose Rhea purchased bond 1 today at price of $973.63 but would like to sell the bond in 7 years at which time similar bonds yield 6.753%. At what price can Rhea expect to sell the bonds? If she sells the bond in 7 years at the price computed, what would be her realized rate of return over her holding period? a Repeat the analysis in parts a) e) assuming the bonds pay semi-annual coupon
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