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UNIVERSITY OF ILLINOIS College of Business - Department of Finance - Finance 300 (Financial Markets) Professor James Jackson Annual Coupon Bond Price Calculations Bond Price (∑ PVCF) = ∑ C \$ / (1 + YTM/n) t*n + FACE \$ / (1 + YTM/n) t*n Bond Price (∑ PVCF) = \$60.00 / (1 + .08/1) 1 = \$55.56 \$60.00 / (1 + .08/1) 2 = \$51.44 \$60.00 / (1 + .08/1) 3 = \$47.63 \$60.00 / (1 + .08/1) 4 = \$44.10 \$60.00 / (1 + .08/1) 5 = \$40.83 \$1000 / (1 + .08/1) 5 = \$680.58 Bond Price (∑ PVCF) = \$920.15 Current Yield = Annual Cash Flow \$ / Bond Price Current Yield = \$60.00 / \$920. 15 Current Yield = 6.52% Year # Coupon (C\$) PV (C\$) 1 \$60.00 \$55.56 2 \$60.00 \$51.44 3 \$60.00 \$47.63 4 \$60.00 \$44.10 5 \$60.00 \$40.83 Face Value = \$1,000.00 \$680.58 Bond Price (∑ PVCF) = \$920.15 Years to Maturity Coupon Rate % Market Rate (YTM %) Current Yield 5.00 6.00% 8.00% 6.52% UNIVERSITY OF ILLINOIS

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College of Business - Department of Finance - Finance 300 (Financial Markets) Professor James Jackson Semi-Annual Coupon Bond Price Calculations
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