Question

3. A $10,000 - 5 year bond has a coupon rate of 6.5% semi – annually. Yesterday it was rated triple B with a market rate of 7.15%. Today it was upgraded to single A with a market rate of 6.4%.

1. What was yesterday’s bond price?
2. What is today’s bond price?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

BOND - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Dr General Wrap Text Merge Merge & Center Center SF $ - % % 4:0 .00 8.9 Insert Delete Format File Home Insert Page Layout Formulas Data Review * Cut Calibri -11AA = = = E Copy Paste BI U. 3 A * Format Painter Clipboard Font - AR AS Conditional Format Formatting as Table Styles Cell Styles AutoSum - A Fill Sort & 2 Clear Filter Editing Find & Select Alignment Number Cells AU281 for AT AU AV AW AX AY I 264 265 266 267 268 269 270 271 272 price of semi annual bond BBB RATED PRICE OF THE BOND COUPON RATE 6.50% PAR VALUE 10000 YEARS COUPON(S) 325.00 (SEMI ANNUAL] NO OF PERIODS 10 YTM 7.15% SEMI ANNUAL YTM 3.575% 273 274 275 276 277 278 279 YESTERDAY'S PRICE 9730.73 [=PV(AV277,AV275,-AV274,-AV272)] 280 281 282 H Rea Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE s1o BIDDING, UNDERWRITING EUAC AW LIFELP, IP, MRP, INFLATION WARRANT refund YIELD SPOT ferences 54 55 56 I BOU 130% I _ 0_ +

BOND - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Σ AutoSum : A Dr General Wrap Text Merge Merge & Center Center SF $ - % % 4:0 .00 8.9 Insert Delete Format File Home Insert Page Layout Formulas Data Review * Cut Calibri -11AA = = = E Copy Paste BI U. 3 A * Format Painter Clipboard Font - AR AS Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select Alignment Number Cells AU281 for AT AU AV AW AX AY I 264 265 266 267 268 269 270 271 272 6.50% 10000 price of semi annual bond A RATED PRICE OF THE BOND COUPON RATE PAR VALUE YEARS COUPON(S) NO OF PERIODS YTM SEMI ANNUAL YTM 5 273 274 325.00 (SEMI ANNUAL] 10 6.40% 275 276 277 278 3.200% 279 TODAY'S PRICE 10042.22 [=PV(AV277,AV275,-AV274,-AV272)] 280 281 282 H Rea Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE s1o BIDDING, UNDERWRITING EUAC AW LIFELP, IP, MRP, INFLATION WARRANT refund YIELD SPOT ferences 54 55 56 I BOU 130% I -_ 0