INPUT DATA

Years to Mat: 15
Coupon rate: 10%
Annual Pmt: $100
Par value = FV: $1,000
Going rate, rd= 10%

price of bond ($1,000.00)

Value of Bond under different interest rate, Price of Bo

maturity
$1,600
N 5% 10% 15%
0 $1,519 $1,000.00 $707.63 $1,400
1 $1,495 $1,000.00 $713.78
$1,200
2 $1,470 $1,000.00 $720.84
3 $1,443 $1,000.00 $728.97 $1,000
4 $1,415 $1,000.00 $738.31
$800
5 $1,386 $1,000.00 $749.06
6 $1,355 $1,000.00 $761.42 $600
7 $1,323 $1,000.00 $775.63
$400
8 $1,289 $1,000.00 $791.98
9 $1,254 $1,000.00 $810.78 $200
10 $1,216 $1,000.00 $832.39
$0
11 $1,177 $1,000.00 $857.25 0 1 2 3 4 5 6
12 $1,136 $1,000.00 $885.84 Premi um bond
13 $1,093 $1,000.00 $918.71
14 $1,048 $1,000.00 $956.52
15 $1,000 $1,000.00 $1,000.00

Problem
What is the current yield on a $1,000 par value, 10% annual coupon bond that is currently selling for $985?
Par value $1,000.00
Coupon rate: 10%
Annual Pmt: $100.00
Current price: $985.00

A.payment/current
Current Yield price 10.15%

Problem
You have just purchased an out standing 15-year bond with a par value of $1000 for $1145.68. Its annual coupon is
$75. What is the bond's yield to maturity?
Par value $1,000
N 15
Annual payment $75
Current price $1,145.68

YTM ? 6%
 Price of Bond Over Time

2 3 4 5 6 7 8 9 10 11 12 13 14 15
Premi um bond Par bond Dis count bond

ual coupon is
Data
Pv ($2,000)
N 3

I 0.04 0.05 0.06 0.2

FV $2,249.73 $2,315.25 $2,382.03 $3,456.00

Pv (in mln) -100

N 10
I 0.08
FV $215.89

data
FV 2249.73
N 3 5
I 0.04 0.06

Price of bond(PV) ($2,000.00) ($1,849.11) ($1,681.13)

($1,849.11)