C06
Chapter 6 Spreadsheet Problem Solutions (C06)
PARTS a – c
INPUT DATA: KEY OUTPUTS:
18
$1,584.48
Maturity value
Coupon rate of interest
Interest payments per year
Market rate (yield to maturity), rd
MODEL-GENERATED DATA:
Years to
Maturity
Beginning of
Year Value ($)
End of Year
Value ($)
Capital Gains
($)
Capital Gains
Yield (%)
Interest ($)
Current Yield
(%)
Total Yield
(%)
20
19
18 $1,584.48 $1,563.70 ($20.78) -1.31% $100 6.31% 5.00%
13 $1,469.68 $1,443.16 ($26.52) -1.80% $100 6.80% 5.00%
12 $1,443.16 $1,415.32 ($27.84) -1.93% $100 6.93% 5.00%
11 $1,415.32 $1,386.09 ($29.23) -2.07% $100 7.07% 5.00%
10 $1,386.09 $1,355.39 ($30.70) -2.21% $100 7.21% 5.00%
9 $1,355.39 $1,323.16 ($32.23) -2.38% $100 7.38% 5.00%
8 $1,323.16 $1,289.32 ($33.84) -2.56% $100 7.56% 5.00%
7 $1,289.32 $1,253.78 ($35.54) -2.76% $100 7.76% 5.00%
PARTS d & e
INPUT DATA: KEY OUTPUTS:
10
Yield to maturity, rd7.00%
6%
Interest payments per year
Maturity value
# Years Bond
was Held
Beginning of
Year Value ($)
End of Year
Value ($)
Capital Gains
($)
Capital Gains
Yield (%)
Interest ($)
Current Yield
(%)
Total Yield
(%)
1 $929.00 $934.11 $5.11 0.55% $60 6.46% 7.01%
2 $934.11 $939.58 $5.47 0.59% $60 6.42% 7.01%
3
4
5
Coupon rate of interest
Yields to the original investor (Assumes the current market rate, YTM, remains the same each year the bond is held as
when the bond was purchased, except in the final year.)
Original maturity (years)
Bond Valuation
1. There are a number of instructions with which you should be familiar to use these computerized models. These
instructions appear in a separate worksheet labeled INSTRUCTIONS. If you have not already done so, you should read
these instructions now. To read these instructions, click on the worksheet labeled INSTRUCTIONS.
Years remaining to maturity
Page 1
GRAPH
10.0%
15.0%
20.0%
Page 2
We have already entered the base case data for each model in this
file, and the models have performed the analysis for preceding parts
of the problem. You will need to enter the data for each of the
remaining parts of the problem–we indicate in each problem the parts
that should be done using the spreadsheet. However, there are several
points worth noting before you go into a model:
1. The input data are entered in specified cells in the INPUT DATA
section. When you change an input item, the model automatically
2. The key output data are displayed to the right of the INPUT DATA
3. Input data items that you can change are distinguished from the
ones you should not change. The items that you can change are
highlighted in color (blue) whereas the other items are printed in black.
4. All percentages must be entered as decimals. Dollars and other
numbers must be entered without dollar signs or commas.
5. Instructions and comments concerning specific models accompany
GENERAL INSTRUCTIONS FOR COMPUTERIZED PROBLEM SOLUTIONS