46
Calculating bond price and accrued interest
A $100, 20-y
ear
, 6.5% coupon bond is issued to mature on
A
ugust 15, 2023.
It w
as sold on No
v
ember 3, 2006 to yield the
purchaser 7.2% compounded semiann
ually until matur
ity
. At
what pr
ice did the bond sell? Also calculate the accr
ued coupon
interest.
Pr
ocedure
K
e
y
operation
Displa
y
Br
ing up the initial dis-
pla
y in NORMAL mode
.
s
000
Select bond calcula-
tions
.
#
COUPON(PMT)=
000
Mak
e sure the actual calendar is set (
360
is not displa
y
ed).
Enter the coupon r
ate
(%).
6.5
Q
COUPON(PMT)=
650
Enter the redemption
v
alue
.
i
100
Q
REDEMPT(FV)=
10000
Enter the settlement
date
.
i
11032006
Q
M-
D
-Y
1=[F
R
]
11-
3-2
00
6
Enter the redemption
date
.
i
08152023
Q
M-
D
-Y
2=[TU]
8-15-2
0
23
Enter the n
umber of
coupon pa
yments per
y
ear
.
i
2
Q
C
P
N/Y
(
N
)
=
2
00
Enter the ann
ual yield
(%).
i
7.2
Q
YIEL
D(
I/Y
)
=
72
0
Calculate bond pr
ice
.
i
@
PRI
C
E(PV)=
9
323
Calculate the accr
ued
interest.
i
ACCU
INT=
141
Calculate bond pr
ice
including accr
ued
interest.
s
i
v
+
i
/
=
PV+ANS=
94
6
4
Ans
wer:
The bond sold at $93.23 and the accr
ued coupon
interest w
as $1.41 (the bond pr
ice including accr
ued
interest w
ould be $94.64).
The asking pr
ice on the abo
v
e
bond is $92.50.
What will y
our
yield be?
3 Financial FunctionsCurrent.indd 46
06.7.10 8:38:42 PM