Question

Asked Nov 19, 2019

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Bond 1 | |

Yield to Maturity | 10% |

Coupon rate | 14% |

Maturity (Years) | 12 |

Face value |
1,000 |

- Construct a Two-Way Data Table to demonstrate the impact of the coupon rate and the time to maturity on the bond’s duration using:
- Coupon Rates of 0%, 5%, 10%, 15%, and 20%.
- Maturities of 2 years, 4 years, 6 years, 8 years, and 10 years.

- How is a bond’s duration impacted by varying the coupon rate?
- How is a bond’s duration impacted by varying the time to maturity?
- What implications would these impacts have for a bond investor if interest rates change?

Please use excel to show work

Step 1

Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you. If you want remaining sub-parts to be solved, then please resubmit the whole question and specify those sub-parts you want us to solve.

Step 2

Yield to Maturity (rate) = 10%

Face Value (fv) = $1,000

Coupon Rates = 0%, 5%, 10%, 15% and 20%

**Note: **Coupon Payment (pmt) is changes from the change in the coupon rate.

Two-way data table is prepared by using excel is as follows:

Price of the Bonds is calculated by using PV function of excel.

To open the "PV function" window - MS-Excel --> Formulas --> Financials --> PV.

Step 3

The result of the above ta...

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