Bond Valuation

Where,
C = coupon payment 
n = number of payments 
i = interest rate, or required yield 
M = value at maturity, or par value

YTM (Yield To Maturity)

Where,
C = coupon payment 
n = number of payments*2 
F = Face Value
P = Market value/Price
YTC (Yield To Call)

***Current Yield= Interest/Current Market Price

Problems:
1. Calculate the price of a bond with a par value of $1,000 to be paid in ten years, a coupon
rate of 10%, and a required yield of 12%. 
2. The price of a bond is TK920 with a face value of TK1000 which is the face value of many
bonds. Assume that the annual coupons are TK100, which is a 10% coupon rate, and that
there are 10 years remaining until maturity. What is the YTM?
3. Figure out the YTM if risk-free interest rate is 7.5% and inflation rate is 6.5% & risk
premium is 1%. Consider the following bonds:

a. a 10-year zero-coupon bond that pays TK 1000 at maturity;

b. a 10-year 7%-coupon corporate bond with a face value of 1000 & current market
price is 980 TK.
For each bond, calculate:
 The present value (Bond Price)
 The expected return