Question: please answer all cells and explain how each number is found for each cell. thanks Question 4. Interest Rate Risk ON YOUR OWN You will
Question 4. Interest Rate Risk ON YOUR OWN You will need 550,000 in 5 years to buy your dream car. You want to invest in one of two bonds. Bond A: 7 percent coupon with maturity in 5 years Bond B: 8.6 percent coupon with maturity in 6 years (a). What is the price/value of each bond? How much will have to be invested in each bond to meet the objective? Objective (amount of eash that will be needed ) Years to maturity Coupon rate Par value Yicld to maturity Annual coupon payment Price (PV) Puture value of all the coupon payments Terminal value ( p er bond) F of bonds that must be purhased Total cost \begin{tabular}{|c|c|} \hline Bond A & Bond B \\ \hline $50,000 & $50,000 \\ 5 & 6 \\ 7.0% & 8.6% \\ $1,000 & $1,000 \\ 5.0% & 6.0% \\ \hline & \\ & \\ & \\ & \\ \hline \end{tabular} Total cost 116 date date maturity (in years) No) \begin{tabular}{|lllll|} \hline Bond A & 12/5/23 & 12/5/28 & 7.0% & 5.0% \\ Bond B & 12/5/23 & 12/5/29 & 8.6% & 6.0% \\ \hline \end{tabular}
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