Question: Please Solve using EXCEL. The correct answers are listed. An investor is considering the following bonds. The bonds pay interest annually. A: $1000 par value

Please Solve using EXCEL. The correct answers are listed. An investor is considering the following bonds. The bonds pay interest annually.

A: $1000 par value bond with 5 years to maturity paying a 3% coupon. The bond has a yield to maturity of 6%.

B: $1000 par value bond with 7 years to maturity paying a 5.9% coupon. The bond has a yield to maturity of 3.4%.

C: $2500 par value bond with 30 years to maturity paying 2.7% coupon. The bond has a yield to maturity of 2.3%

What is the current market price of these bonds? What is their current yield? What is their capital gains yield?

Solution: Market P Current Y Cap Gains Y
A 873.63 3.43% 2.57%
B 1,153.44 5.12% -1.72%
C 2,715.00 2.49% -0.19%

If interest rates suddenly rose by 1%, what is the new market price for each bond? What is the % change in market value?

Solution: New P % Change
A 835.99 -4.31%
B 1,088.71 -5.61%
C 2,217.07 -18.34%

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