PLEASE ANSWER QUESTION 2

1. You own two bonds. Bond A is a 10% coupon bond with a yield of 5% which makes payments every quarter and matures in 15 years. The face value of the bond is $100000. Bond B is a 3% coupon bond with a yield of 8% that makes payments every month and has a maturity of 10 years. Calculate the value of each bond at every coupon payments date until maturity using excel. Graph your results. (10 marks)

2. The company who originally sold you bond B have come on hard times. They have informed you that they will not be able to make the next 20 coupon payments but forecast that they will be able to make all payments after this date. What is the new value of the bond? What is the percentage change in price? Use excel for all calculations. (10 marks)