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Appendix C: Extended Bond Calculations
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 1 |
Key in 10 (mo.), press SAVE .
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| 2 |
Key in 12 (mo./yr.), press ÷.
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| 3 |
Key in 9 (yrs.), press +.
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| 4 |
Key in 365 (days/yr.), press × n.
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| 5 |
Key in 4 (coupon rate), press PMT.
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| 6 |
Key in 106.75 (price), press PV.
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| 7 |
Press i (YTM) to get yield (3.19).
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At this
point the effective yield-to-maturity has been calculated and need only
be applied to the remaining time to maturity to arrive at the correct
amortized value, as follows:
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| 1 |
Key in 11 (mo.), press SAVE .
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| 2 |
Key in 12 (mo./yr.), press ÷.
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| 3 |
Key in 8 (yrs.), press +.
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| 4 |
Key in 365 (day/yr.), press × n.
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| 5 |
Key in 3.19 (computed YTM), press i.
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| 6 |
Key in 4 (coupon), press PMT.
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| 7 |
Press PV (BOND) to obtain the amortized value (106.24).
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| 8 |
Press 6 to obtain answer rounded to six decimal places (106.241026).
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To summarize:
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| | Enter: | | | See Displayed: | | |
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10 SAVE 12 ÷ 9 + 365 × n 4 PMT
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yield-to-maturity
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11 SAVE 12 ÷ 8 + 365 × n 3.19 i
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amortized value
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value extended to 6 decimal places
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Implications of Increased Precision on Bond Calculations
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The ability of the HP-80 to provide more accurate bond calculations can
be directly translated into dollars and cents. This is especially true
when buyers and sellers of bonds wish to evaluate a potential trade with
respect to an alternate investment vehicle.
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