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  • MK Chapter 7 and 8

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    natasha karyadi
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    1) The document discusses bond valuation including key terms like stated interest payment, coupon rate, maturity rate, and yield to maturity. 2) It provides an example bond valuation problem where the present value and annuity present value are calculated separately and then added together to find the total bond value. 3) The key formula for bond valuation calculates the total bond value as the sum of the present value and annuity present value.

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    MK CHAPTER 7 AND 8

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    1) The document discusses bond valuation including key terms like stated interest payment, coupon rate, maturity rate, and yield to maturity. 2) It provides an example bond valuation problem where the present value and annuity present value are calculated separately and then added together to find the total bond value. 3) The key formula for bond valuation calculates the total bond value as the sum of the present value and annuity present value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    15 views1 page

    MK Chapter 7 and 8

    Uploaded by

    natasha karyadi
    1) The document discusses bond valuation including key terms like stated interest payment, coupon rate, maturity rate, and yield to maturity. 2) It provides an example bond valuation problem where the present value and annuity present value are calculated separately and then added together to find the total bond value. 3) The key formula for bond valuation calculates the total bond value as the sum of the present value and annuity present value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Chapter 788

    I .
    Bonds & bond valvation

    stated interest payment made on bond


    a) the a
    compon
    :

    b) compon rate :
    the annual compon divided by the face value of a bond

    c) maturity rate :
    the specified date on which the principal amount of a bond is paid

    d) Yield to Maturity (YTM) : the rate required in the market on a boad

    Bond Valuation Example

    a)

    a) present value =
    1000/1 08 ,

    1000/2 . 1589
    =
    $463 .
    19

    b) Annuity Present Value =


    &0 x (1 -
    1/1 .
    08")/0 . 08

    =80x(1 -1/2 1589) /0 08 . .

    =
    80 x 6 7101 .

    =
    $536 . &

    2) Total Bond Value =


    pV+ APV

    =
    463 19 .
    +
    536 . 81

    =$1000
    /I

    BOND VALUATION

    FORMULA :

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