Marymount University Financial Management in the Yield to Maturity Rate Worksheet

1. I sent an example last week that showed Bond Values for a bond that had a 20 year life, 5 year life, and a 1 year life. This example was meant to show you “Price Risk” or “Interest Rate Risk”. It did not give you the formulas which was an omission, just the Bond Value.

2. This example was designed to show you for a Bond that had a 9% Coupon Rate, if interest rates changed to either 6% or 14% for these bonds, how the values changed.

3. The example also shows you the process if interest is paid semiannually (2 times a year) for the same bond. You will need this for the Midterm Exam, since part e. of the question (7-19) on page 267 asks for a Bond Value if interest in paid semiannually.

4. I included in this EXCEL Spreadsheet the formulas for the Present Value of the Bond examples.

We will be discussing the example more on Wednesday.

Thanks, Charlie Miller

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Bond Market Value Calculation – PV EXCEL – Cells.xlsx