Homework for Chapter 10: Problem # I in the text (Chapter 10 NOTE: PLEASE USE THE ATTACHED EXCEL FILE TITLED Homework for Chapter 10 Excel" TO SOLVE THE FOLLOWING PROBLEM You are considering the following bonds to include in your portfolio: Bond 1 Bond 2 Bond 3 Price $900.00 $1,100.00 $1.000.00 Face Value $1.000.00 $1,000.00 $1,000.00 Coupon Rate 7.00% 10.00% 9.00% Frequency I 2 4 Maturity (Years) 15 20 30 Required Return 9.00% 8.00% 9.00% a) Determine the highest price you would be willing to pay for each of these bonds using the PV function. Also find whether the bond is undervalued, overvalued, or fairly valued (25 points). b) Determine the yield to maturity on these bonds using the RATE function assuming that you purchase them at the given price. Also calculate the current yield of each bond (25 points). c) Determine the yield to call of each bond using the RATE function if the time to first call and the call premium are the following (25 points): Bond A Bond B Bond C Call Premium % 3.00% 4.00% 5.00% Years to first call 5 4 3 d) Assume the following settlement dates for each bond: Bond 1 Bond 2 Bond 3 Settlement Date 1/1/2018 6/1/2018 9/1/2018 Use the Price and YIELD functions to recalculate your answers on parts (a), (b), and (c) (25 points) CD DE Bond 1 Bond 2 Bond 3 $900.00 $1,100.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 7.00% | 10.00% 9.00% Price Face Value Coupon Rate Frequency Maturity (Years) Required Return Call Premium % Years to first call 15 9.00% 3.00% 20 8.00% 4.00% 30 9.00% 5.00% (a) (6) Value Under/Over Valued Yield to Maturity Current Yield Yield to Call (c) Settlement Date Maturity Date Call Date Bond 1 1/1/2018 1/1/2033 1/1/2023 Bond 2 6/1/2018 6/1/2038 6/1/2022 Bond 3 9/1/2018 9/1/2048 9/1/2021 Value Under/Over Valued Yield to Maturity Current Yield Yield to Call