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46
Calculating bond price and accrued interest
A $100, 20-year, 6.5% coupon bond is issued to mature on
August 15, 2023. It was sold on November 3, 2006 to yield the
purchaser 7.2% compounded semiannually until maturity. At
what price did the bond sell? Also calculate the accrued coupon
interest.
Procedure Key operation Display
Bring up the initial dis-
play in NORMAL mode.
s
000
Select bond calcula-
tions.
#
COUPON(PMT)=
000
Make sure the actual calendar is set (360 is not displayed).
Enter the coupon rate
(%).
6.5
Q
COUPON(PMT)=
650
Enter the redemption
value.
i
100
Q
REDEMPT(FV)=
10000
Enter the settlement
date.
i
11032006
Q
M-D-Y 1=[FR]
11- 3-2006
Enter the redemption
date.
i
08152023
Q
M-D-Y 2=[TU]
8-15-2023
Enter the number of
coupon payments per
year.
i
2
Q
CPN/Y(N)=
200
Enter the annual yield
(%).
i
7.2
Q
YIELD(I/Y)=
720
Calculate bond price.
i
@
PRICE(PV)=
9323
Calculate the accrued
interest.
i
ACCU INT=
141
Calculate bond price
including accrued
interest.
s
i
v
+
i
/
=
PV+ANS=
9464
Answer: The bond sold at $93.23 and the accrued coupon
interest was $1.41 (the bond price including accrued
interest would be $94.64).
The asking price on the above bond is $92.50. What will your
yield be?
3FinancialFunctionsCurrent.indd463FinancialFunctionsCurrent.indd46 06.7.108:38:42PM06.7.108:38:42PM
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