Bond Valuation and Yields(1).pdf

Bond Valuation and Yields(1).pdf - Bond Valuation and...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Page 1 of 2 Fadel N. Lawandy Bond Valuation and Yields 1. Bond Valuation: The value of a bond at any given time is the sum of all its future cash flows (Coupon Payment, and Face Value) discounted at the prevailing yield for similar Bonds. When Bond prices are quoted, they are quoted as Dirty price or Clean/Pure price. a. Dirty price: is the price of the bond including accrued interest. The Dirty Price occurs between coupon payments. b. Clean/Pure Price: is the pure price of the bond not accounting for any accrued interest between coupon payments. How to calculate the price of a bond using time value of money calculator function: S/A coupon paying bond Annual coupon paying bond FV = Face Value FV = Face Value PMT = Face value x coupon rate/2 PMT = Face value x coupon rate N = number of coupon payments remaining N = # of coupon payments remaining I = (Prevailing interest rate or yield)/2 I = Prevailing interest rate or yield PV = Price (compute) PV = Price (compute) 2. Yields a. Yield to Maturity (YTM):
Image of page 1

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

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern