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[DOC File]finpko.faculty.ku.edu
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B. Start with the price of a bond and use calculus to derive the duration formula. Calculate Duration. C. Assume that you own a four-year, 10% annual coupon bond with a face value of $1000. The appropriate discount rate for this bond is 8% EAR. What is the duration of the bond? (5 points)
how to calculate bond price

How to Calculate a Bond Price | Pocket Sense
D*can be used to calculate the bond’s percentage price change for a given change in interest rates Ex. Yield on 8% 5 year bond selling at par has duration* of 4.31 years rates go to 71/2% ΔP/P = - 4.31* (-.005) = .0216 =2.16%
price of a bond formula

[DOC File]Bond Features - University of Kentucky
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The price of the bond is $718.65. Calculate the semiannual coupon payment. Semiannual Coupon Payment = (0.10 ( $1,000) / 2 = $50. Apply the annuity formula to calculate the PV of the 30 coupon payments (=15 years ( 2 payments per year). In addition, the $1,000 payment at maturity must be discounted back 30 periods.
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[DOC File]INFLATION, CASH FLOWS AND DISCOUNT RATES
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Using the information just calculated in question 9, calculate the percentage change in price and the dollar change in price for this note. Assume interest rates increase by 30 basis points. Compare your calculations of price changes in question 10 with the price that you obtain from a financial calculator using a yield-to-maturity that is 30 ...
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[DOC File]1 - Babson College
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Chapter 10. Valuation and Rates of Return (For the first 20 bond problems, assume interest payments are on an annual basis.) 1. Bond value (LO3) The Lone Star Company has $1,000 par value bonds outstanding at 9 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is: a. 6 ...
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[DOC File]Bond Yields and Prices
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As we know, the price of a bond changes in response to changes in interest rates. We also know that bond duration is a measure of a bond’s price sensitivity to interest rate changes. This formula can be used to estimate the percentage that a bond’s price will change when interest rates change. In the formula, D is the bond’s duration.
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[DOC File]Dividend discount model (a - Murray State University
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Bond Pricing: PV(Bond) = PV (coupon payments ) + PV (final principal payment) Two ways to price a bond: Spot Rates are known: (1.1) on p.4 of Taggart. Cash flows at different dates from the same bond are discounted at different spot rates. You can obtain these spot rates from market quotes. You should be able to derive spot rates from coupon bonds
how to calculate bond value

[DOC File]The major formulas for present value (these will reappear ...
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Duration measures a bond’s sensitivity to interest rate changes. More specifically, duration is a weighted average of individual maturities of all the bond’s separate cash flows. The weight is the present value of the payment divided by the bond price. Calculate a duration for a bond with three years until maturity. 8% of Coupon rate and yield.
formula to calculate bond value

[DOC File]Chapter 10
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Exactly the same computation would apply; the bond price would fall to $908.81. Now suppose that, instead of rising, the interest were to fall to 6%. The value of the bond would increase to: = + + … + = $1,104.81. Of course, if the bond were callable, say at $1,060, the value of the bond would be less.
how to calculate bond price

Formula to calculate price of bond