Prof provided the answer key but REQUIRES showing the solution analysis using Excel functions formulas STEP BY STEP Thank you Answer Key PJ 2974, or 29 74 PK 2333, or 23 33 Question Bond J has a coupon rate of 3 percent Bond K has a coupon rate of 9 percent Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 6 percent If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds What if rates suddenly fall by 2 percent instead What does this problem tell you about the interest rate risk of lower coupon bonds Q4 Answer Key The company should set the coupon rate on its new bonds equal to the required return Which is YTM 6 29 Question Uliana Co wants to issue new 20 year bonds for some much needed expansion projects The company currently has 6 percent coupon bonds on the market with a par value of $1,000 that sell for $967, make semiannual payments, and mature in 20 years What coupon rate should the company set on its new bonds if it wants them to sell at par

Question: Prof provided the answer key but REQUIRES showing the solution/analysis using Excel functions/formulas STEP-BY-STEP. Thank you. Answer Key : PJ% = .2974, or 29.74%

Prof provided the answer key but REQUIRES showing the solution/analysis using Excel functions/formulas STEP-BY-STEP. Thank you.

Answer Key:

PJ% = .2974, or 29.74% PK% = .2333, or 23.33%

Question:

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 6 percent.

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?
What if rates suddenly fall by 2 percent instead?
What does this problem tell you about the interest rate risk of lower-coupon bonds?

*******

Q4.

Answer Key:

The company should set the coupon rate on its new bonds equal to the required return. Which is YTM = 6.29%

Question:

Uliana Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 6 percent coupon bonds on the market with a par value of $1,000 that sell for $967, make semiannual payments, and mature in 20 years.

What coupon rate should the company set on its new bonds if it wants them to sell at par?

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