# bond (1) - Menu Bonds Formulas Examples Basic bond...

This preview shows pages 1–5. Sign up to view the full content.

Menu Page 1 Bonds Formulas & Examples Basic bond valuation Excel functions Examples Copyright (c) 1997 Ian H Giddy

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Bond Val Page 2 Basic Bond Valuation Bond price (PV annuity + PV principal) PV=PMT*(1-1/(1+R)^n)/R PV=FV/(1+R)^n Example Coupon rate 8 FV 100 Yield 8.00% Yield 8.00% Periods 10 Periods 10 PV 53.7 PV 46.32 Answer Price \$100.00 Bond price with semi-annual payments PV=(PMT/m)*(1-1/(1+R/m)^n*m)/(R/m) PV=FV/(1+R/m)^n*m Example Coupon rate 8 FV 100 Yield 8.00% Yield 8.00% Frequency 2 2 Periods 10 Periods 10 PV 54.4 PV 45.64 Answer Price \$100.00
Excel functions Page 3 Bond calculations with Excel functions Use PRICE function to find a bonds price Settle date 1/1/1997 Mat date 1/1/2007 Rate 8% Yield 9% Frequency 2 Price 93.50 Use YIELD function to find a bond's yield to maturity Settle date 1/1/1997 Mat date 1/1/2007 Rate 8% Price 95 Frequency 2 Yield 8.76% Use MDURATION function to find a bond's modified duration Settle date 1/1/1997 Mat date 1/1/2007 Rate 8% Price 8% Frequency 2 Modified duration 6.8

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Examples Page 4 Examples 1 Atlantic Bell issued 10-year bonds one year ago at a coupon rate of 9.25 percent. The bonds make semiannual payments. If the YTM on these bonds is 7.15 percent, what is the current bond price? Use the Excel PV function to calculate the current value of the bond. Coupon rate 8.25% Yield to maturity 12.00% Years till maturity 7 Bond value \$82.57 2 IBM issued 12-year bonds two years ago at a coupon rate of 8.4 percent. The bonds make semiann payments. If these bonds currently sell for 97.5 percent of par value, what is the YTM?
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern