**KBH Applications Bond Pricing Example: **

Redemption value, $100.00 Semi-annual coupon amount, $1.5625 Semi-annual yield, 1.3735% [ with this value as one-half the standard yield-to-maturity rate unless the yield rate was determined firstly by the inverse of this bond pricing ] Redemption date, Feb 25, 2029 Settlement date, Jan 25, 2019 Number of coupon payments remaining, 21 x = bond gain at redemption in decimal-form percentage y = bond price x / y = 1.3735 * 21 / 100 [ divided by 100 to develop decimal-form ] x / y = 0.288435 x = 0.288435y and x + y = (1.5625 * 21) + 100 [ here with 100 as the redemption value ] x + y = 132.8125 0.288435y + y = 132.8125 1.288435y = 132.8125 y = 103.08 as the bond price . Accrued interest owed to the bond seller is 5/6 * 1.5625 = 1.30 . Then the inverse of the bond price is x / y = r * 21 / 100 x / 103.08 = r * 21 / 100 x = 103.08 * r * 21 / 100 x = 21.6468r and x + y = (1.5625 * 21) + 100 21.6468r + 103.08 = 132.8125 21.6468r = 29.7325 r = 1.3735% as the semi-annual yield .

Last revised:

January 27, 2019

June 25, 2019

May 12, 2020