Question: Consider the following two bonds on Sheet 1. Bond A Term to maturity: 10 years from today Face value: $1,000 Coupon rate: 10%, annual

Consider the following two bonds on Sheet 1. Bond A Term to maturity: 10 years from today Face value: $1,000 Coupon rate: 10%, annual coupons Repayment of face value: On last coupon date Bond B. Term to maturity: 20 years from today Face value: $1,000 Coupon rate: 10%, annual coupons Repayment of face value: On last coupon date (1). Assume discount rate is 10%. Use the PV function to calculate the prices for these two bonds. (2 points) (2). Make a Data Table to compare the bond prices when discount rate varies from 1% to 20%, incrementing by 1%. (5 points) 2 3 4 Coupon rate 5 Maturity 6 Face value Bond A 10% 10 1,000.00 Bond B COMPARING TWO BONDS 10% 20 1,000.00 8 Data table: Effect of market interest rate on bond prices 9 10 Market interest rate (discount rate) Price of Bond A Price of Bond B 10%
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The task involves calculating the present value PV of two bonds Bond A and Bond B both with annual coupon payments and then comparing the bond prices at different discount rates Lets start with Bond A ... View full answer
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