Beruflich Dokumente
Kultur Dokumente
Learning Module
Definitions
Coupon Rate
Definitions
Coupon Payments
Maturity Date
Definitions
Original Maturity
Remaining Maturity
The time from when the bond was issued until its maturity date.
Call Date
For bonds which are callable, i.e., bonds which can be redeemed
by the issuer prior to maturity, the call date represents the
earliest date at which the bond can be called.
4
Definitions
Call Price
Required Return
Definitions
Yield to Maturity
Yield to Call
Bond Valuation
Example
1.
Draw a timeline
?
?
$1000
+
$100
$100
$100
$100
$100
$100
$100
$100
$100 $100
Example
2.
PV = $565.02
9
Example
Find the PV of the face value
3.
PV = CFt / (1+r)t
PV = $1000/ (1+.12)10
PV = $321.97
4.
PMT = 100
FV = 1000
n = 10
i = 12
PV = ?
Note that if the payments had been semiannual,
PMT=50, FV=1000, n=20, i=6, PV=?=$885.30.
10
Realized Return
Example
PV = S [CFt / (1+r)t]
t=0
Example
13