19UIUC%20FIN%20300%20Bonds%20Practice%20Problems%20Answers-2%20FA09%20v1

19UIUC%20FIN%20300%20Bonds%20Practice%20Problems%20Answers-2%20FA09%20v1

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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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This note was uploaded on 02/10/2011 for the course FIN 300 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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19UIUC%20FIN%20300%20Bonds%20Practice%20Problems%20Answers-2%20FA09%20v1

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