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F G B D E 171 A 10-year, 12% quarterly coupon bond with a par value of $1,000 may be called in 3 years at a call price of $1,035. The bond sells for $1,160. (Assume that the bond has just been issued.) 172 173 174 Basic Input Data: HINTS: 175 Years to maturity: : 10 input 176 Periods per year: 4 input 177 Periods to maturity: 40 calculate 178 Coupon rate: 12% Input 179 Par value: $1,000 input 180 Periodic payment: $30 calculate 181 Current price $1,160 input 182 Call price: $1,035 input 183 Years till callable: 3 Input 184 Periods till callable: 12 calculate 185 186 What is the bond's yield to maturity? 187 188 Peridodic YTM = 2.38% 189 Annualized Nominal YTM = 9.50% 190 191 192 What is the bond's current yield? 193 194 Current yield = annual coupon / current price 195 Current yield = $120 / $1,160 196 Current yield - 10.34% 197 198 199 what is the bond's capital gain or loss yield? 200 201 Cap. Gain/loss yield = nominal YTM current yield 202 Cap. Gain/loss yield = 9.50% 10.34% 203 Cap. Gain/loss yleld = 1 -0.84% 204 2051 B C D E 203 206 What is the bond's yield to call? 207 208 Here we can again use the Rate function, but with data related to the call. 209 210 Peridodic YTC = 1.77% 211 Annualized Nominal YTC = 7.09% 212 213 214 Nominal market rate, r: 215 Value of bond if it's not called: 216 Value of bond if it's called: 217 218 We can use the two valuation formulas to find values under different r's, in a 2-output data table, and then use an IF statement to determine which value is appropriate: 219 220 221 Value of Bond if: If Actual value, HINT: The bond would not be called unless r

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