Work should be done in groups of two or three. Similar submissions will both get a mark of zero. The homework should be in an Excel form and to be submitted via Ritaj and file name format includes your names like this Diama_Abulaban_Iyad_Jabr.xlsx No other forms would be accepted.
a Assume you have a bond bought on the 15th of April 2019, maturity date is 15th of April 2028, if the bond has semi-annual coupon payments with 7.5% YTM and 6% Coupon rate, find the following:
A. Find the PV of the bond
B. Find the PV of the bond given it’s a Zero-Coupon Bond.
C. What is the bond’s price elasticity if the required return changed to 9.5%?
D. Calculate the duration of the bond.
E. What is the percentage change in bond’s price for an increase in yield for 0.3 percentage points.
F. With a decrease in interest rates, would you prefer investing in coupon or zero-coupon bonds and why?
