## Bond Valuation Practice Problems

- The $1,000 face value ABC bond has a coupon rate of 6%, with
interest paid semi-annually, and matures in 5 years. If the bond is
priced to yield 8%, what is the bond's value today?
- FV = $1,000
- CF = $60/2 = $30
- N = 5 x 2 = 10
- i = 8%/2 = 4%

**PV = $918.89**

- The $1,000 face
value EFG bond has a coupon of 10% (paid semi-annually), matures in 4
years, and has current price of $1,140. What is the EFG bond's yield to
maturity?
- FV = $1,000
- CF = $100/2 = $50
- N = 4 x 2 = 8
- PV = $1,140

- i = 3%
**yield-to-maturity = 3% x 2 = 6%**

- The HIJ bond has a current price of $800, a maturity value
of $1,000, and matures in 5 years. If interest is paid semi-annually and
the bond is priced to yield 8%, what is the bond's annual coupon rate?
- PV = $800
- FV = $1,000
- N = 5 x 2 = 10
- i = 8% / 2 = 4%

- CF = $15.34
**Coupon = $30.68 per year or 3.068%**

- The KLM bond has a 8% coupon rate (with interest paid semi-annually), a
maturity value of $1,000, and
matures in 5 years. If the bond is priced to yield 6%, what is the bond's
current price?
- CF = $40
- FV = $1,000
- N = 10
- i = 6%/2 = 3%

**PV = $1,085**

- The NOP bond has an 8% coupon rate (semi-annual interest), a maturity
value of
$1,000, matures in 5 years, and a current price of $1,200. What is the
NOP's yield-to-maturity?
- CF = $40
- FV = $1,000
- N = 5 x 2 = 10
- PV = $1,200

- i = 1.797%
**yield-to-maturity = 1.797% x 2 = 3.594%
**

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