Bonds: price and yield
General · Mathematics
Study notes
Q: 3-year ₹1000 bond, 10% annual coupons, yield 8%. Find price. Coupons: ₹100 each year. Price: 100a_3(8%)+1000v³ = 100(2.5771)+1000(0.7938). = 257.71+793.83 = ₹1051.54. Premium (coupon > yield!)! If yield 12%: 100(2.4018)+1000(0.7118) = ₹951.98 (discount!). (Price-yield inverse!)