Question: Question 3: Use the BOND BUILDER spreadsheet from Week 3 to answer this question. Assume that the 30-Year U.S. Treasury Bond yields exactly 4% for

Question 3: Use the BOND BUILDER spreadsheet from Week 3 to answer this question. Assume that the 30-Year U.S. Treasury Bond yields exactly 4% for each scenario: Primula Corporation decides to issue a new 30-year bond. The bond has a 6% coupon which represents the underlying yield of the 30-year U.S. Treasury Bond plus a 2% credit spread. If the Yield-to-Maturity (YTM) at issuance is also 6%, what is the price of the new bond? Two years later, Primulas credit spread increases to 3%. What is the new price of the bond? A year after that, Primulas credit spread increases to 3.5% and you buy $10,000 worth of bonds. What is the price of the bond? 1-Point Extra Credit: What is the NPV of this purchase?

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