Question: Problem ONE Use the DETAILS found on the FIRST Try WORKSHEET Actions Bond Valuations over Time (uses REMAINING TIME TO MATURITY for N as the

Problem ONE

Use the DETAILS found on the FIRST Try WORKSHEET

Actions

Bond Valuations over Time (uses REMAINING TIME TO MATURITY for N as the bond moves CLOSER to Maturity)

CALCULATE:

YTM

Current Yield

Capital Gains Yield

BOND Price

Problem TWO

A 15-year, 10.0000% semi-annual bond with a PAR value of $1,000

is currently selling for $1,195

with a YTM of 7.7753%

The bond could be called after SIX (6) years

for a CALL price of $1035

CALCULATE: YTC (Yield to CALL)

COMPLETE: Call Decision (yes or no) choice

Problem THREE

Determinants of Interest Rates

Using the following DATA:

R*= 1.7500%

I₁ = 7.0000%

I₂ = 5.0000%

I₃₌ 2.0000%

MRP = .3000% ( t - 1) (NOTE: This is a PERCENTAGE, not a DECIMAL MRP) t = number of years to maturity

DRP = 6.5000%

LP = 1.9000%

CALCULATE:

SIX (6) year TREASURY BOND RATE

FOUR (4) year CORPORATE BOND RATE

COMPLETE the assignment by entering your answers on the WORKSHEET

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