Question: HELP!! How do I do this on excel? Submit in Blackboard by October 1, 5:30 PM. Solve both problems in Excel. Question 1: You are
HELP!! How do I do this on excel?
Submit in Blackboard by October 1, 5:30 PM. Solve both problems in Excel. Question 1: You are considering issuing two types of bonds. The current yield to maturity on similar bonds is 4% annually. Both bonds have a face value of $1000 and will pay annual coupons. Bond A has a maturity of 10 years and bond B has a maturity of 20 years. You want to compute the price of both bonds at the prevailing interest rate and see what happens to the price of the bonds as the interest rate changes. You should consider a range of interest rates starting in 2 % and ending in 7%, with increments of 0.1%. Calculate the price of both bonds at each interest rate and plot the bond prices against the interest rate. What do your results indicate about the interest rate risk of bonds with longer time to maturity? Question 2: You are considering issuing a stock that will pay a dividend of $1.00 a year from today. The base case assumption is that the dividend will grow at an annual rate of 10% for two years after that, then at 6% for another five years and then will grow at 4% annually for ever. If the required rate of return on similar stocks is 12% what should be the price of the stock
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