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1. Excel Problem 1 (this is the hardest of the excel problems, you might warm up with the others): Download the Excel file titled 3001 Homework 2 - Interest Rates.xlsx" from the Canvas homepage. a. Calculate the price of a 10% coupon rate bond with a face value of $1,000 and that currently has 30 years to maturity. Calculate the price of this same bond for each of the next 30 years. Assume the yield to maturity for each year is what is listed in the Interest Rates." b. Calculate the holding period return for each year, assuming you buy the bond and hold it for a year. (ie, what if I buy at 0 and hold until 1, then what if I buy at 1 and then hold until 2, etc.) Holding period return is the realized return in each year. If you buy one bond today, calculate the value of your holdings in each year, assuming that you reinvest each coupon in the bond. (by buying a fraction of a bond) d. What is the average holding period return? Compare this to the yield to maturity when you bought your bond. Year: 600 vu WNO 12 14 Interest Rate 5.00% 1 5.59% 2 5.36% 4.99% 5.18% 5.82% 5.37% 5.64% 5.57% 9 6.04% 10 6.40% 11 6.54% 5.38% 13 4.75% 4.23% 15 4.09% 3.77% 17 3.46% 18 4.21% 3.30% 2.69% 1.67% 22 1.68% 23 1.49% 1.97% 2.16% 2.79% 3.15% 28 3.62% 3.24% 3.26% 16 19 24 29 30 1. Excel Problem 1 (this is the hardest of the excel problems, you might warm up with the others): Download the Excel file titled 3001 Homework 2 - Interest Rates.xlsx" from the Canvas homepage. a. Calculate the price of a 10% coupon rate bond with a face value of $1,000 and that currently has 30 years to maturity. Calculate the price of this same bond for each of the next 30 years. Assume the yield to maturity for each year is what is listed in the Interest Rates." b. Calculate the holding period return for each year, assuming you buy the bond and hold it for a year. (ie, what if I buy at 0 and hold until 1, then what if I buy at 1 and then hold until 2, etc.) Holding period return is the realized return in each year. If you buy one bond today, calculate the value of your holdings in each year, assuming that you reinvest each coupon in the bond. (by buying a fraction of a bond) d. What is the average holding period return? Compare this to the yield to maturity when you bought your bond. Year: 600 vu WNO 12 14 Interest Rate 5.00% 1 5.59% 2 5.36% 4.99% 5.18% 5.82% 5.37% 5.64% 5.57% 9 6.04% 10 6.40% 11 6.54% 5.38% 13 4.75% 4.23% 15 4.09% 3.77% 17 3.46% 18 4.21% 3.30% 2.69% 1.67% 22 1.68% 23 1.49% 1.97% 2.16% 2.79% 3.15% 28 3.62% 3.24% 3.26% 16 19 24 29 30

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