Financial Calculation Examples 2
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If bonds are purchased on April 20, 2005 with a redemption
date of July
10, 2010 and an interest payment rate of 3.5%, then how much should the bond purchasing price be to make the annual yield of these bonds 4.5%? |
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Set: Periods/Year = Semi Annual (Interest payment period)
Bond Date = Date
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d1
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Date of issue (Month, day, year)
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04202005
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d2
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Date of maturity (Month, day, year)
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07102010
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RDV
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Per value price (Redemption price per 100 dollars)
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100 dollars
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CPN
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Interest payment rate
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3.5%
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YLD
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Annual yield
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4.5%
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PRC |
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PRC = -$95.385821 = Bond purchase price CST = -96.35267183 = Price including
interest |
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From the above calculations, the bond purchase price with expected rate of yield is 95.38 dollars.
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