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

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