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L M M N P 0 A21 xfx Practice 7.2 Find Bond Valuation Using the Price Function Name Box 3 B C D E G H H 4 Practice 7.1 Find Bond Valuation As with any financial instrument, the price of a bond is just the present value of the future cash flows. What is the price of a bond with semiannual coupon payments and the following 5 characteristics? 5 5 Coupon rate: 6.00% Years to maturity: 15 Yield to maturity 8.00% 9 Par value: s 1.000 10 Since the band has semiannual payments, the coupon payments will be: 11 Coupon payments: 12 13 Now we can find the present value of the coupon payments, the present value of par, and the bord price, which are: 14 Present value of coupon payments: 15 Present value of par: 16 Band price: 17 18 Of course, we could have entered the coupon payments and par value in the same PV function, making sure that both were negative. This would give us: 19 Bond price: 2n 21 Practice 7.2 Find Bond Valuation Using the Price Function 22 What is the price of a bard with the following characteristics? 23 Years to maturity 5 24 Settlement date: 25 Maturity date: 26 Annual coupon rate: 9.00 27 Yield to maturity: 7.50% 28 Face value (% of par): 100 29 Coupons per year: 2 2 sn Band price of par): 31 Dollar price of bond: 32 33 Practice 7.3 Finding the YTM 34 You can use the YIELD function in Excelta calculate the yield to maturity of a bond. Suppose we have a bond with the following characteristics. What is the YTM of the bond? 35 Years to maturity 36 Settlement data: 37 Maturity date: Annual coupon rate: 7.50% 39 Bond price (% of par): 98.120 Face value of par): 100 41 Coupons per year: 2 Yield to Maturity (TM): 42