1

0
FV 1000 issued at par, coupon 7%, 3yrs and redeemed at par -1000
issued at disc aand redeemed at par -990
issued at par aand redeemed at disc -1000
variable coupon paying 70,80,90, issue redemption par -1000
zero coupon paying 1220 at end -1000

2 0 1 2 3 4 5
1 -1000 70 70 70 70 1070
2 -980 65 70 75 80 1080
3 -1000 0 0 0 0 1380
4 -1000 0 0 1260
5 -975 80 80 1080

3
YRS HDFC ICICI
0 -990 -1000 for the same tenure
1 80 75 for the same risk levels
2 80 80 yield will be the same
3 1080 995
8.39% 5.13%

YRS HDFC
0 -990 ₹ -994.86 ₹ -984.70 price and yeild have an inverse relationship
1 80 80 80
2 80 80 80
3 1080 1080 1080
8.39% 8.20% 8.60%

pg no 267
prblm no 1

bond
A 8.44%
B 10.39%
C 9.25%
D 11.00%
E 9.22%
 2
bond x bond y
9.00% ₹ -772.18

3
bond x bond y
13.58% ₹ -875.84

4
bond a bond b
₹ 82.10 8.21%
₹ 84.56 8.46%

5 bond 1 bond 2
₹ 959.91 ₹ 944.67

6
bond 1 bond 2
₹ 1,045.91 ₹ 1,015.19

7
₹ 968.99
₹ 785.47 if rate changes to 7.25%

8
₹ 774.58 if rate changes to 7.75%

9
9.00% whenever issue price equals redemption price
yield will be equal to the coupon rate so yield to maturity os 9% and issue price is 1000
9.25% ₹ -991.94
9.50% ₹ -983.98
9.75% ₹ -976.10

10 8.25% ₹ -1,024.70
8.50% ₹ -1,016.38
8.75% ₹ -1,008.14

11 original YTM is 9.25% since issue price and redemption price are same.
if price becomes 990 new YTM will be
9.51%

12
original yeild 11.34%
after 2 yrs the bond becomes to a 8 yr bond. price ₹ -982.71
13
10.84% ₹ -1,008.28
 1 2 3
70 70 1070
70 70 1070
70 70 1,060
70 80 1090
0 0 1220

IRR( Here we call yield to maturity instead of IRR)

7.00% rate > 7.00%
7.84% cannot use rate func cz coupon rate is not constant
6.65%
8.01% 8.01%
8.99%
d issue price is 1000