A bond is currently selling for $1040. It pays the amounts listed in the file P02_32.xlsx at the end of the next 6 years. The yield of the bond is the interest rate that would make the NPV of the...

A bond is currently selling for $1040. It pays the amounts listed in the file P02_32.xlsx at the end of the next 6 years. The yield of the bond is the interest rate that would make the NPV of the bond’s payments equal to the bond’s price. Use Excel’s Goal Seek tool to find the yield of the bond.

Repeat parts a–d of the previous problem for a 6-month European put option with exercise price $40. Again, assume a current stock price of $35, a risk-free rate of 5%, and an annual volatility of 40%.