Question: Start with the partial model in the file Ch06 Build a Model.xlsx on the textbook's website. A 20-year, 8% semiannual coupon bond with a par

Start with the partial model in the file Ch06 Build a Model.xlsx on the textbook's website. A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.) e. How would the price of the bond be affected by a change in the going market interest rates? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. That is an oversimplification, but assume it anyway for purposes of this problem.) f. Now assume the date is October 25, 2013. Assume further that a 12%, 10-year bond was issued on July 1, 2013, pays interest semiannually (on January 1 and July 1), and sells for $1,100. Use your spreadsheet to find the bond's yield.

Basic Input Data:
Years to maturity:		20
Periods per year:		2
Periods to maturity:		40
Coupon rate:		8%
Par value:		$1,000
Periodic payment:		$40
Current price		$1,100
Call price:		$1,040
Years till callable:		5
Periods till callable:		10

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