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Unformatted text preview: note: not calculated with r p *note: FV formula -n refers to years still left (if any) at that point Perpetuity PV = A / r p YTM YTM = r p * k r p periodic rate (not coupon rate) k coupons per year Current Yield (CY) CY = A / P A annuity (/coupon) P price today Bond Selling At Satisfies This Condition Discount Coupon Rate < Current Yield < YTM Premium Coupon Rate > Current Yield > YTM Par Value Coupon Rate = Current Yield = YTM (Coupon Rate = Nominal Yield) Real Rate (Fischer Formula) 1 + r r = (1+ nominal) (1 + inflation) r r real rate Replicating Bonds Time 1 B1 * x + B2 * y = desired $ Time 2 B1 * x + B2 * y = desired $$ x # of B1 coupons y # of B2 coupons...
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- Spring '09