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SHOW THE COMPLETE CALCULATIONS
e the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault JP Morgarn Settlement Coupon rate Frequency coupon Today Today Today 2.75% 2.25% 0% payment Term to Maturity Face value Yield to Maturity Price Current Yield 2 years 100 5.0% 20 years $1,000 3.4% 5 years 100 4.2%
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Volkswagon 5.0% JP Morgan 1.7% 40 11.25 Renault 4.296 [JP Morgan-3.4%/2-1.7% where annual rate is converted into semiannual rate] Yield to Maturity, RATE # of Years to maturity, NPER Annual coupon payment, PMT Maturity value at the end, FV Annual coupon type, TYPE a) Value of the bond 5 [JP Morgan 20 years x 2 40 as there are 2 semiannuals in a year] € 0.00 [Volkswagon-100x2.75%-$2.75; JP Morgans],000x2.25%/2-1125] 2.75 100.00 1,000.00 100.00 Face value of the bond] 0 0 0 if coupons paid at the end of each period; 1 if coupons paid at the beginning of each period 95.82 834.10 81.41 [Ref: NOTE] b) Bonds Current Yield 2.87% 2.70% 0.00% (Volkswagon-2.75/95.82-2.87%; JP Morgan-11.25/834.10-1.35% x2-2.70%) [Coupon payment/Bonds current price; but for JP Morgan, the result shall be multiplied by 2 to convert it into annual Current Yield]NOTE For Volkswagon: Value of the bond is calculated using EXCEL FUNCTION PV(rate,nper,pmt fv type where rate-5.0%; nper-2; pmt -2.75; fv=-100, type=0; Here, value for pmt & fv are negative as they denote cash inflows; type 0 because cash flows occur at the end of each year only For JP Morgan: Value of the bond is calculated using EXCEL FUNCTION PV(rate, nper,pmt,fv,type) where rate=1.7%; nper-40; pmt=-11.25; fv=-1000, type:0; Here, value for pmt & fv are negative as they denote cash inflows; type 0 because cash flows occur at the end of each year only For Renault: Value of the bond is calculated using EXCEL FUNCTION PV rate,n per pmtfv type) where rate4.2%; nper=5; pmts 0; fv=-100; type:0; Here, value for fv is negative as it denotes cash inflow; type 0 because interest compounds at the end of each year only Volksw Renault 4.296 [JP Morgana 3.496/2-1.796] 2 Yield to Maturity, RATE 3 # of Years to maturity, NPER 4 Annual coupon payment, PMT 5.0% 3.496/2 20 2 CS*2.2596/2 1,000.00 -85.2.7596 € 0.00 [Volkswagon-100x2. 75%-$2.75; JPMorgan-1,000x2.25%)2-11.25] Maturity value at the end, FV 6 Annual coupon type, TYPE 7 a) Value of the bond 100.00 PWB2,вз,-B4,-B5B6) B4/B7 100.00 [Face value of the bond] 0-0 if coupons paid at the end of each period; 1 if coupons paid at the beginning of each period. C2,C3,-C4,-C5,C6) pV(D2,D3,-D4,-D5D6) [Ref: NOTE] . 9 b) Bonds Current Yield -CA/C72 -D4/D7 [Volkswagon-2.75/95.82-2.8796; JPMorgan-11.25/834. 10:1.35%x2-2.7096]

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