Goverment Bond Equation

colin14 · #1 Jan 23, 2009, 08:29 PM

I would like to know the answer to the following with the formua as well

I wish to calculate the purchase price of a 10 year goverment bond parcel with a yeild rate of 8.95% paid 1/2 yearly coupon the rate is 7.5% and the bond parcel has 250 days till maturity Thank you

Clough · Jan 23, 2009, 09:01 PM

Hi, colin14!

Greetings and WELCOME to the site! I just moved your question that you had posted in Introductions to this forum topic area so that it will get the most exposure to those who are best able to answer it. Introductions is for people to introduce themselves and we try to not ask questions there.

It can be a little confusing when first learning how to use this site! Your question will get noticed much more in this forum topic area.

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Thanks!

Chelsea26 · Jun 10, 2009, 02:21 AM

Quote:

Originally Posted by colin14

I would like to know the answer to the following with the formua as well

I wish to calculate the purchase price of a 10 year goverment bond parcel with a yeild rate of 8.95% paid 1/2 yearly coupon the rate is 7.5% and the bond parcel has 250 days till maturity Thank you

Hi Colin ... did you ever get a response to your question? I am trying to calculate the exact same question. Please let me know if you had any luck. Thanks

Netball · Jun 17, 2009, 11:54 PM

I think that you simply take the Future Value ($100 + $8.95) and discount this back at 7.5% to get a Present Value of 101.34883.

As there is 250 days left, the holder still gets 2 coupon payments - hence the full 8.95% is factored into the FV.

If this is an Australian Gov Bond then the price is rounded to 3 decimal places i.e 101.339

Netball · Jun 17, 2009, 11:55 PM

...sorry I meant to round to 101.349

Chelsea26 · Jun 18, 2009, 02:14 AM

Quote:

Originally Posted by Netball

...sorry I meant to round to 101.349

Thanks for your help Netball ...

Mariai83 · Nov 11, 2009, 03:08 AM

Hi, i've got exactly the same question. I was just wondering if this was the right answer. Thanks



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