Price of a bond
Find what a bond is worth today, given its coupon and the yield you want.
A bond pays a fixed coupon twice a year and returns its face value (100) at the end. Its price today is all those payments discounted at the yield you require. If the coupon is below your required yield, the price is below 100.
Example: a 6% bond maturing in exactly 10 years from the settlement date, with an 8% required yield, priced per 100 of face value.
Classic Financial II
Start on the main screen: Press 2ND then CPT (QUIT) to leave a worksheet and return to the plain calculator. ON/OFF also drops back to the standard screen and clears an error.
Open the bond worksheet (2nd, 4). Enter the settlement date SDT as 1.0120 (January 1, 2020), then the coupon CPN of 6.
2NDBOND41.0120ENTER↓6ENTER↓Enter the redemption date RDT: 1.0130. Leave RV at 100, ACT day count and 2/Y alone.
1.0130ENTER↓↓↓↓On the YLD line, type the yield 8 and enter. Move down to PRI and press CPT.
8ENTER↓CPT
You should seePRI= 86.41
RPN Financial 12
Start on the main screen: There is no menu to leave: the display always shows the X register. Press f then R/S (P/R) to leave program mode, and clear a pending prefix by pressing ON.
Store the yield in i and the yearly coupon in PMT.
8i6PMTType the settlement date 1.012020 (month.dayyear) and ENTER, then the maturity date 1.012030.
1.012020ENTER1.012030Press f, then yˣ (PRICE).
fPRICEyˣ
You should see86.41
This price excludes accrued interest, which is shown one stack line up.
Tips
- The coupon is entered as a yearly percent of face value. A 6% bond is 6, not 0.06.