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DETERMINING BOND VALUE

Corporate Bond

Maturity 10.00 Years


Coupon Interest Rate 10.00% p.a.
Coupon Payment 2.00 a year --> semi annually
Par Value 1,000.00
Required Return 10.00% p.a.

Bond Cash Flow

Cash Flow
Period PV
Coupon Principal Total
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Bond Value
DETERMINING YIELD TO MATURITY

Corporate Bond

Maturity 10.00 Years


Coupon Interest Rate 10.00% p.a.
Coupon Payment 2.00 a year --> semi annually
Par Value 1,000.00
Bond Price -

Yield to Maturity (YTM) p.a.

Bond Cash Flow

Cash Flow
Period PV
Coupon Principal Total
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Bond Value
Corporate Bond

Maturity 12.00 Years


Coupon Interest Rate 11.00% p.a.
Coupon Payment 1.00 a year
Par Value 1,000.00
Required Return A 11.00% p.a.
Required Return B 15.00% p.a.
Required Return C 8.00% p.a.

Bond Value Calculation

B A C
15.00% 11.00% 8.00%
PV of Coupon Payment
PV of Par Value
Bond Value

Required Return - Market Value of Bond


12.00

10.00

8.00

6.00

4.00

2.00

-
15.00% 11.00% 8.00%
BOND A

Maturity 5.00 Years


Coupon Interest Rate 11.00% p.a.
Coupon Payment 1.00 a year
Par Value 1,000.00
Required Return 1 8.00% p.a.
Required Return 2 11.00% p.a.
Required Return 3 14.00% p.a.

Bond A Value Calculation

1 2 3
8.00% 11.00% 14.00%
PV of Coupon Payment
PV of Par Value
Bond Value
BOND B

Maturity 15.00 Years


Coupon Interest Rate 11.00% p.a.
Coupon Payment 1.00 a year
Par Value 1,000.00
Required Return 1 8.00% p.a.
Required Return 2 11.00% p.a.
Required Return 3 14.00% p.a.

Bond B Value Calculation

1 2 3
8.00% 11.00% 14.00%
PV of Coupon Payment
PV of Par Value
Bond Value
REQUIRED RETURN & MATURITY

Required Return Bond A Value Bond B Value


8.00% - -
11.00% - -
14.00% - -