Question: Pleas show work and formulas in and using EXCEL for each question. Thanks! P6-19 Bond value and time: Changing required returns Lynn Parsons is considering
Pleas show work and formulas in and using EXCEL for each question. Thanks!
P6-19 Bond value and time: Changing required returns Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 11% coupon rates and pay annual interest. Bond A has exactly 5 years to maturity, and bond B has 15 years to maturity. a. Calculate the value of bond A if the required return is (1) 8%, (2) 11%, and (3) 14%. b. Calculate the value of bond B if the required return is (1) 8%, (2) 11%, and (3) 14%. c. From your findings in parts a and b, complete the following table, and discuss the relationship between time to maturity and changing Value of bond A Required return 8% 11 14 Value of bond B ? ? 2 ? ? d. If Lynn wants to minimize interest rate risk, which bond should she purchase? Why
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