value of bond = sum of all present values

Value = present value1 + Present value2 + ………. + Present value N

10% seminual coupon bond, maturing in 2 years, YTM is 8%

Time CF PV (at 8%) PV (at 12%)

0.5 50 48.08 47.16981
1 50 46.23 44.49982
1.5 50 44.45 41.98096
2 1050 897.54 831.6983

DR 4% 6%
Price 1036.30 965.3489

1. for a prticualar discount rate, the value of CF will decline as we go further into the future

2. the discount rate and PV are negativly related

3. coupon rate = YTM, price=par value

coupon >YTM, price> par value (premium)
coupon <YTM, price<par value (discount)

Time CF PV (at 8%) PV (at 12%)

0.5 50 48.08 47.16981
1 50 46.23 44.49982
1.5 50 44.45 41.98096
2 1050 897.54 831.6983

DR 4% 6%
Price 1036.30 965.3489
nto the future