Question

There are 3 bonds in this portfolio

1. A 20 year semi-annual bond where:
   1. Par is $100,000
   2. C = 4%
   3. r = 6%         
2. A 30 year annual bond where:
   1. Par is $50,000
   2. C = 3%
   3. r = 3.5%
3. a 5 year semi-annual bond where:
   1. Par is $30,000
   2. C = 3%
   3. r = 2.25%

Find the value of each bond in the portfolio & how much is the portfolio worth?

Answer 1

years semi annual bond a par value (A) years period (N) coupon coupon rate rate 100,000.00 20 40 4% 2000 6.00% 3.00% half yearly Lyearly half yearly $76,885.23 present value Bond B par value (A) years period (N) coupon coupon years 50000 30 30 3% 1500 years yearly rate 3.50% yearly present value $45,401.99

30,000.00 years semi annual Bond C par value (A) years period (N) coupon coupon rate rate 10 3% 450 2.50% 1.25% hafl yearly yearly half yearly present value $30,700.91 43 total value of portfolio $152,988.13

FORMULAE

years semi annual bond a par value (A) years period (N) coupon coupon rate rate 100000 20 =+B13*2 0.04 =+B12*B15/2 0.06 =+B17/2 half yearly yearly half yearly =PV(B18,B14,-B16,-B12,0) present value Bond B par value (A) years period (N) coupon coupon 50000 30 years years 0.03 =+B22*B25 yearly rate 0.035 yearly present value =PV(B28,B24,-B26,-B22,0)

Bond C par value (A) 30000 semi annual period (N) coupon coupon rate rate =+B34*2 0.03 =+B33*B36/2 0.025 =+B38/2 hafl yearly yearly half yearly present value =PV(B39,B35,-B37,-B33,0) total value of portfolio =+B41+B30+B20

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