In this report, we will discuss some of the concepts relating to bond valuation and will also compare the interest rate risk and reinvestment along with some of the measures to manage them. We are sure that by the end of this brief report, we will be having a good understanding relating to valuation of fixed income securities and risks associated with them.
Answer 1) Continue reading...
Referring to the calculations in excel spreadsheet, we find that the present value of the bond is $852.73. In addition, since a 6.5% bond is trading at Yield to Maturity of 8%, it