In this assignment, you will be tasked with calculating the value of three different types of bonds and analyzing their characteristics. You will work with a ParValue Bond, Discount Bond, and Premium Bond. Understanding bond valuation and analyzing yield measures are essential for investors. Through this assignment, you will apply bond valuation techniques and explain yield measures such as Yield to Maturity (YTM) and Current Yield (CY).

Assignment Instructions:

The following three types of bonds:

Par Value Bond: Face value of $1,000, coupon rate of 5%, and maturity of 5 years.

Discount Bond: Face value of $1,000, coupon rate of 3%, and maturity of 10 years. The market price of this bond is currently $900.

Premium Bond: Face value of $1,000, coupon rate of 6%, and maturity of 3 years. The market price of this bond is currently $1,100.

Calculate the value of each bond using the following steps:

Par Value Bond: Calculate the present value of coupon payments and the final principal payment at maturity using the bond's coupon rate and yield to maturity (YTM).

Discount Bond: Calculate the present value of coupon payments and the final principal payment at maturity using the bond's coupon rate and YTM.

Premium Bond: Calculate the present value of coupon payments and the final principal payment at maturity using the bond's coupon rate and YTM.

Calculate the Yield to Maturity (YTM) for each bond using the appropriate formula. Explain the concept of YTM and its significance in bond valuation.

Calculate the Current Yield (CY) for each bond using the appropriate formula. Explain the concept of CY and how it provides insights into the bond's annual return.

Analyze the characteristics and implications of each bond type, considering factors such as the bond's value relative to its face value, coupon rate, maturity, YTM, and CY. Discuss the relationship between the bond's market price and its value relative to face value (discount or premium).