Copy of FCF 9th edition Chapter 07

Copy of FCF 9th edition Chapter 07 - Chapter 7 Problems...

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Chapter 7 Problems 1-35 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-In" be installed in Excel. To install these, click on the Office button then "Excel Options," "Add-Ins" and select "Go." Check "Analyis ToolPak" and "Solver Add-In," then click "OK."
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Chapter 7 Question 1 Input area: Coupon 10% Required rate of return 8% Output area: The yield to maturity is the required rate of return on a bond expressed as a nominal annual interest rate. For noncallable bonds, the yield to maturity and required rate of return are interchangeable terms. Unlike YTM and required return, the coupon rate is a fixed percentage of par over the life of the bond used to set the coupon payment amount. For the example given, the coupon rate on the bond is still 10%, and the YTM is 8%.
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Chapter 7 Question 2 Output area: Price and yield move in opposite directions; if interest rates rise, the price of the bond will fall. This is because fixed coupon payments determined by the fixed coupon rate are not as valuable when interest rates rise--hence, the price of the bond decreases.
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Chapter 7 Question 3 Input area: Settlement date 1/1/2009 Maturity date 1/1/2019 Coupon rate 7.50% Coupons per year 1 Face value $100 Yield to maturity 8.75% Output area: Price $918.89
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Chapter 7 Question 4 Input area: Settlement date 1/1/2009 Maturity date 1/1/2018 Annual coupon rate 9% Coupons per year 1 Face value (% of par) 100 Bond price (% of par) 93.400 Output area: Yield to maturity 10.15%
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Chapter 7 Question 5 Input area: Years to maturity 13 Coupons per year 1 Face value $1,000 Bond price $1,045 Yield to maturity 7.50% Output area: Present value of final payment $390.56 Present value of coupon payments $654.44 Coupon payment $80.54 Coupon rate 8.05%
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Chapter 7 Question 6 Input area: Settlement date 1/1/2009 Maturity date 1/1/2019 Coupon rate 6.90% Coupons per year 2 Face value $100 Yield to maturity 7.40% Output area: Price $965.10
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Chapter 7 Question 7 Input area: Settlement date 1/1/2009 Maturity date 1/1/2019 Annual coupon rate 8.40% Coupons per year 2 Face value (% of par) 100 Bond price (% of par) 105 Output area: Yield to maturity 7.67%
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Chapter 7 Question 8 Input area: Years to maturity 14.5 Coupons per year 2 Face value $1,000 Yield to maturity 6.8% Bond price $924 Output area: Present value of final payment $379.23 Present value of coupon payments $544.77 Coupon payment $29.84 Coupon rate 5.97%
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Chapter 7 Question 9 Input area: Treasury rate 7.00% Inflation rate 3.80% Output area: Approximate real rate 3.20% Exact real rate 3.08%
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Chapter 7 Question 10 Input area: Real rate 3.00% Inflation rate 4.70% Output area: Treasury rate 7.84%
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Chapter 7 Question 11 Input area: Investment return 14% Real return 9% Output area: Inflation rate 4.59%
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Chapter 7 Question 12 Input area: Total return 11.40% Inflation rate 4.80% Output area: Real return 6.30%
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Copy of FCF 9th edition Chapter 07 - Chapter 7 Problems...

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