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    bfreed36's Avatar
    bfreed36 Posts: 2, Reputation: 1
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    #1

    Feb 12, 2010, 12:17 PM
    How do you compute the price of a bond?
    The price of a bond will be determined for any given interest rate, duration and face amount at maturity.
    bfreed36's Avatar
    bfreed36 Posts: 2, Reputation: 1
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    #2

    Feb 12, 2010, 12:19 PM
    Quote Originally Posted by bfreed36 View Post
    The price of a bond will be determined for any given interest rate, duration and face amount at maturity.
    Provide examples.
    bulksalty's Avatar
    bulksalty Posts: 31, Reputation: 3
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    #3

    Feb 12, 2010, 12:31 PM

    You'll need an annuity like sum for the interest payments and then discount the principle payment. Add the two and you've priced your bond. You could use a financial calculator or excel's bond functions if you're doing more than one.
    artful1979's Avatar
    artful1979 Posts: 1, Reputation: 1
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    #4

    Feb 13, 2010, 10:02 AM
    an example:

    In September 2009, I bought a government bond which will mature in August 2013 and pay an annual coupon rate of 6 percent. The bond, which has a face value of 1,000 and pays interest every six months, offers a yield of 4 percent a year.

    What was the price of bond that I bought in September 2009?
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