please SHOW WORK for business calculator. ex. rate, N, PMT,PV,FV 6 You bought a

Question

please SHOW WORK for business calculator. ex. rate, N, PMT,PV,FV

6 You bought a Beta Tapeplayer Inc bond two days ago. It was rated AA by Standard and Poor's and was selling at a yield to maturity (YTM) of 6.10%. Today it was downgraded to an A rating and the YTM increased to 6.60%. The bond has a coupon rate of 5.70%, and has 11 years to maturity. Assume annual coupons and a $1000 face amount. What was your purchase price? What is it worth today? What has been your percentage loss in value? Note: Ignore the 2 days - treat it as if the bond rating dropped immediately after purchase.

Explanation / Answer

Find the bond price for both the YTMs

Purchase price:

Input the following values in the business calculator:

N = 11

PMT = 0.057*1000 = 57

I/Y = 6.1%

FV = 1000

CPT-> PV = 968.61

Worth today:

N = 11

PMT = 0.057*1000 = 57

I/Y = 6.6%

FV = 1000

CPT-> PV = 931.15

% change in value = (Price today - purchase price)/Purchase price = (931.15-968.61)/968.61 = -3.87%

% loss = 3.87%

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