BOND PRICING

Bond Pricing

 

PB =    Price of the bond
Ct =     interest or coupon payments
T     =     number of periods to maturity
r     =     semi-annual discount rate or the semi-annual yield to maturity

Example: Price of 8%, 10-yr. with yield at 6%

Coupon = 4%*1,000 = 40 (Semiannual)
Discount Rate = 3% (Semiannual)
Maturity = 10 years or 20 periods
Par Value = 1,000