Coupon Bond Worksheets



Coupon Bond Worksheets

10% Coupon Bond - yield to maturity = 10%

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Click Here for a pic of the 10 Year from FRED

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Example from 11/4/2014

Consider the following from the WSJ

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Let us focus on the 3-year note - yield = .948 % (94.8 basis points)

We now go to Stock Trak to take a look at the price of this 3 year Gov security

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This 3 year note matures 10/31/2017 - the date of this spot price is 11/04/2014, close enough to three years.

Note that this note (ha ha!) has a coupon payment of 1.88%. We know that the 'current' yield (think of it as a snapshot) is .948 %. Since the coupon rate = 1.88% is greater than the current yield = .948, this bond will sell at a premium. The quoted price from stock trak is $1026.70, ...... $26.70 higher than par - of course, whenever the coupon rate is above the yield (from the WSJ), then the bond (note) will sell at a premium and vica versa.

Worksheet from excel - estimated price pretty close!

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Rate of Return vs yield

On to Chapter 6

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