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Appendix C: Extended Bond Calculations
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 You have just found the price of the bond and have stored it temporarily. Now, determine the present value of the call premium:
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| 1 |
Key in 7 (yrs.), press SAVE .
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| 2 |
Key in 2 (coupons/yr.), press × n.
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| 3 |
Key in 2.4 (yield), press SAVE .
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| 4 |
Key in 2 (coupons/yr.), press ÷ i.
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| 5 |
Key in 4 (call premium), press FV.
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| 6 |
Press PV to obtain present value of the premium, (3.38).
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| 7 |
Press RCL + to add bond price and to obtain desired callable price, (108.83).
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| 8 |
Press 6 to show results rounded to six decimal places, (108.831895).
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To summarize:
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| | Enter: | | | See Displayed: | | |
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| 7 SAVE 365 × n 2.4 i 3.25 PMT PV | | | |
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bond price
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| 7 SAVE 2 × n 2.4 SAVE 2 ÷ i 4 FV PV | | | |
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present value of premium
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callable bond price (percentage)
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price extended to 6 decimal places
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Yield-to-Call Calculations
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Effective annual yield-to-call calculations are made in the same manner
as yield-to-maturity calculations except that the annual coupon rate and
the price must be divided by the ratio of the call price-to-par before
being loaded into their appropriate locations. To accomplish this, it is
first necessary to store the current bond price into constant storage.
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