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7 Congratulations, you have been hired as an analyst at the Procter and Gamble Co. 28 (PG). It is May 1, 2022. PG just made a coupon payment (semi-annual) on its 99 "6% 2050" bonds that mature on May 1, 2050. The bonds currently sell for 110 30 with a par value of 100 31 32 a. What is the yield to maturity on the PG 2049 bond? 33 34 YTM 5.31% 35 36 37 38 39 b. What is the Current Yield? The Capital Gains Yield? 40 41 42 43 Current Yield- Capital Gains Yield- 5.45% -0.14% 44 C. The PG 2050 bond was issued with a call provision that cannot be used the first five 45 years. If the bond is called on its first allowable date of May 1, 2025, the company 46 will pay bondholders 105 47 48 What is the yield to call on the PG 2049 bond? Y TC 4.01% 49 50 51 52 53 54 55 56 d. Kimberly-Clark Corp (KMB) has a 3% 2050 bond issue with a YTM of 4.0% The PG 57 and KMB bonds are identical in every way, including the Moody's and S&P ratings. 58 maturity date and the fact that the respective companies can call them on May 1, 59 2025 for 105. (The bonds were issued on different dates, thus their coupon rates and 60 current market prices are the only difference.) 61 62 What is the price for the 2050 KMB bond? 63 H 14 55 56 d. Kimberly Clark Corp (MB) has a 3% 2050 bond issue with a YTM of 0% The PG 57 and KMB bends are dentical in every way, including the Moody's and S&P ratings 58 maturity date, and the fact that the respective companies can call them on May 1 50 2025 for 105 (The bonds were issued on different dates, thus the coupon rates and 60 current market prices are the only difference) 62 What is the price for the 2050 KMB bona? 02 64 Price 65 66 69 55 7 e. Explain the difference in the YTM for the 2050 PC and KMB bonds which bond provides the more accurate estimate 7 of the rate required in the marketplace for PG at this time? Hint the bonds are of similar risk and should have a strate 12 however, they do not. Why is that?) TE 3. KM has just issued a 5-year semiannual bond with a coupon, a par value of 100 and a 45 YTM Which KMB bond (year or 25 year) has the higher price risk and which one has the 5 higher re-investment rate is? Highlight ther 5 Year or 20 Year below * Highlight 1 Higher Price Risk 5 Year 20 Year 5 Year 20 Year Highlight1 Higher Revesten Raleik D 55 G H M 56 d. Kimberly-Clark Corp. (KMB) has a 3% 2050 bond issue with a YTM of 4.0% The PG 57 and KMB bonds are identical in every way, including the Moody's and S&P ratings, 58 maturity date and the fact that the respective companies can call them on May 1, 59 2025 for 105. (The bonds were issued on different dates, thus their coupon rates and 60 current market prices are the only difference) 61 62 What is the price for the 2050 KMB bond? 63 64 Price 65 66 67 68 69 70 e. Explain the difference in the YTM for the 2050 PG and KMB bonds. Which bond provides the more accurate estimate 71 of the rate required in the marketplace for PG at this time? (Hint: the bonds are of similar risk and should have a similar rate: 72 however, they do not. Why is that?) 73 74 75 of a 77 78 79 80 81 82 80 1. KMB has just issued a 5-year semi-annual bond with a 3% coupon, a par value of 100 84 and a 4% YTM. Which KMB bond (5 year or 28 year) has the higher price risk and which one has the 85 higher re-investment rate risk? Highlight either 5 Year or 28 Year below. 86 87 Highlight 1 Higher Price Risk 5 Year 28 Year 38 89 Highlight 1 Higher Re-investment Rate Risk 5 Year 28 Year 91 92 93 Sheet1 7 Congratulations, you have been hired as an analyst at the Procter and Gamble Co. 28 (PG). It is May 1, 2022. PG just made a coupon payment (semi-annual) on its 99 "6% 2050" bonds that mature on May 1, 2050. The bonds currently sell for 110 30 with a par value of 100 31 32 a. What is the yield to maturity on the PG 2049 bond? 33 34 YTM 5.31% 35 36 37 38 39 b. What is the Current Yield? The Capital Gains Yield? 40 41 42 43 Current Yield- Capital Gains Yield- 5.45% -0.14% 44 C. The PG 2050 bond was issued with a call provision that cannot be used the first five 45 years. If the bond is called on its first allowable date of May 1, 2025, the company 46 will pay bondholders 105 47 48 What is the yield to call on the PG 2049 bond? Y TC 4.01% 49 50 51 52 53 54 55 56 d. Kimberly-Clark Corp (KMB) has a 3% 2050 bond issue with a YTM of 4.0% The PG 57 and KMB bonds are identical in every way, including the Moody's and S&P ratings. 58 maturity date and the fact that the respective companies can call them on May 1, 59 2025 for 105. (The bonds were issued on different dates, thus their coupon rates and 60 current market prices are the only difference.) 61 62 What is the price for the 2050 KMB bond? 63 H 14 55 56 d. Kimberly Clark Corp (MB) has a 3% 2050 bond issue with a YTM of 0% The PG 57 and KMB bends are dentical in every way, including the Moody's and S&P ratings 58 maturity date, and the fact that the respective companies can call them on May 1 50 2025 for 105 (The bonds were issued on different dates, thus the coupon rates and 60 current market prices are the only difference) 62 What is the price for the 2050 KMB bona? 02 64 Price 65 66 69 55 7 e. Explain the difference in the YTM for the 2050 PC and KMB bonds which bond provides the more accurate estimate 7 of the rate required in the marketplace for PG at this time? Hint the bonds are of similar risk and should have a strate 12 however, they do not. Why is that?) TE 3. KM has just issued a 5-year semiannual bond with a coupon, a par value of 100 and a 45 YTM Which KMB bond (year or 25 year) has the higher price risk and which one has the 5 higher re-investment rate is? Highlight ther 5 Year or 20 Year below * Highlight 1 Higher Price Risk 5 Year 20 Year 5 Year 20 Year Highlight1 Higher Revesten Raleik D 55 G H M 56 d. Kimberly-Clark Corp. (KMB) has a 3% 2050 bond issue with a YTM of 4.0% The PG 57 and KMB bonds are identical in every way, including the Moody's and S&P ratings, 58 maturity date and the fact that the respective companies can call them on May 1, 59 2025 for 105. (The bonds were issued on different dates, thus their coupon rates and 60 current market prices are the only difference) 61 62 What is the price for the 2050 KMB bond? 63 64 Price 65 66 67 68 69 70 e. Explain the difference in the YTM for the 2050 PG and KMB bonds. Which bond provides the more accurate estimate 71 of the rate required in the marketplace for PG at this time? (Hint: the bonds are of similar risk and should have a similar rate: 72 however, they do not. Why is that?) 73 74 75 of a 77 78 79 80 81 82 80 1. KMB has just issued a 5-year semi-annual bond with a 3% coupon, a par value of 100 84 and a 4% YTM. Which KMB bond (5 year or 28 year) has the higher price risk and which one has the 85 higher re-investment rate risk? Highlight either 5 Year or 28 Year below. 86 87 Highlight 1 Higher Price Risk 5 Year 28 Year 38 89 Highlight 1 Higher Re-investment Rate Risk 5 Year 28 Year 91 92 93 Sheet1

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