Question: Please show full workings in excel. Consider the bonds below with annual coupon payments starting from year 1 till maturity. [4 points) Coupon rate Maturity
Please show full workings in excel.
Consider the bonds below with annual coupon payments starting from year 1 till maturity. [4 points) Coupon rate Maturity Face value Bond A 5% 10 1,000 Bond B 5% 20 1,000 a. If market interest rate is 6%, what is the price of each bond? b. Make a table of bond prices for varying market interest rate from 0%, 1%, ....., 20% (like the one in lecture slide of Chapter 15) for each of the two bonds. C. Graph the bond prices against market interest rate. d. Using the graph in part c, explain whether longer-term bond or shorter-term bond is more sensitive to changes in market interest rate. Consider the bonds below with annual coupon payments starting from year 1 till maturity. [4 points) Coupon rate Maturity Face value Bond A 5% 10 1,000 Bond B 5% 20 1,000 a. If market interest rate is 6%, what is the price of each bond? b. Make a table of bond prices for varying market interest rate from 0%, 1%, ....., 20% (like the one in lecture slide of Chapter 15) for each of the two bonds. C. Graph the bond prices against market interest rate. d. Using the graph in part c, explain whether longer-term bond or shorter-term bond is more sensitive to changes in market interest rate
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