07 Case model - 07 Case model 3/22/2010 7:08 2/17/2006...

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07 Case model 3/22/2010 7:08 2/17/2006 Chapter 7. Bonds and Their Valuation PART D N 10 CPN % 10% YTM 10% Par Value $1,000 PRICE $1,000 PART E N 10 CPN % 13% YTM 10% Par Value $1,000 PRICE $1,184.34 Premium bond N 10 CPN % 7% YTM 10% Par Value $1,000 PRICE $815.66 Discount bond This spreadsheet model is designed to be used in conjunction with the chapter's integrated case and the related PowerPoint slide presentation. What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%? (1) What is the value of a 13% coupon bond that is otherwise identical to the bond described in part d? Would we now have a discount or a premium bond? (2) What is the value of a 7% coupon bond with these characteristics? Would we now have a discount or a premium bond? (3) What would happen to the values of the 7%, 10%, and 13% coupon bonds over time if the required return remained at 10%?
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Maturity 0 $815.66 $1,000 $1,184.34 1 $827.23 $1,000 $1,172.77 2 $839.95
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07 Case model - 07 Case model 3/22/2010 7:08 2/17/2006...

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