Sharp EL-738 operation manual 650, 10000, 15-2023, 720, 9323, 141, 9464

Page 47

Calculating bond price and accrued interest

A $100, 20-year, 6.5% coupon bond is issued to mature on August 15, 2023. It was sold on November 3, 2006 to yield the purchaser 7.2% compounded semiannually until maturity. At what price did the bond sell? Also calculate the accrued coupon interest.

Procedure

Key operation

Display

Bring up the initial dis-

s

000

play in NORMAL mode.

 

 

 

 

Select bond calcula-

#

COUPON(PMT)=

tions.

 

000

 

 

 

Make sure the actual calendar is set (360 is not displayed).

Enter the coupon rate

6.5 Q

 

 

COUPON(PMT)=

(%).

 

 

 

 

650

 

 

 

 

 

 

Enter the redemption

i

100

Q

 

REDEMPT(FV)=

 

 

value.

 

 

 

 

10000

 

 

 

 

 

 

 

 

 

 

Enter the settlement

i

11032006

Q

M-D-Y 1=[FR]

 

 

date.

 

 

 

 

11- 3-2006

 

 

 

 

 

 

 

 

 

 

Enter the redemption

i

08152023

Q

M-D-Y 2=[TU]

 

 

date.

 

 

 

 

8-15-2023

 

 

 

 

 

 

 

 

 

Enter the number of

i2 Q

 

CPN/Y(N)=

coupon payments per

 

 

 

 

 

 

 

 

200

year.

 

 

 

 

 

 

 

 

 

 

Enter the annual yield

i

7.2

Q

 

YIELD(I/Y)=

 

 

(%).

 

 

 

 

720

 

 

 

 

 

 

 

 

 

Calculate bond price.

i @

 

PRICE(PV)=

 

 

 

 

 

9323

Calculate the accrued

i

 

 

 

ACCU INT=

interest.

 

 

 

 

141

 

 

 

 

 

Calculate bond price

siv+

PV+ANS=

including accrued

i/=

 

interest.

 

 

 

 

9464

Answer: The bond sold at $93.23 and the accrued coupon interest was $1.41 (the bond price including accrued interest would be $94.64).

The asking price on the above bond is $92.50. What will your yield be?

46

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Contents EL-738 Page Contents Operational Notes IntroductionKeys Using the .andKey Notations in This Manual Preparing to Use the Calculator Resetting the Calculator In Case of DifficultyResetting the calculator Key operation keys Calculator and Display LayoutCalculator layout 2ndF Display layoutSelecting the display notation and number of decimal places SET UP MenuSelecting the angular unit see 33333330003 000Selecting the date format see Selecting a modeOperations available in each mode Operating ModesBasic Calculations 14000343 9000Delete key ⋅ ⋅Playback function Editing and Correcting an EntryMemory clear key Cursor keys192 ErrorsMemory use in each mode for memory calculations 500TVM variables Temporary memories A-H, X-ZIndependent memory M Last answer memory ANSExample Key operation Statistical variablesMemory calculations Financial calculations General InformationVariables shared among calculations Variables used in financial calculationsListed financial variables Basic variable operationsTVM variables N, I/Y, PV, PMT, FV Category Display symbols Descriptions ENT and Comp symbolsCompound interest Cash flow diagramsVariables used in the TVM solver Setting the payment period payment dueVariable Corresponding Description Default Variable key TVM Time Value of Money SolverCalculating basic loan interest Basic examples for the TVM solver44000 120024000 5600000Calculating basic loan payments 4008000 125586Calculating future value 360020000 FV=376889 1002000 1000000Ordinary annuity Specifying payments dueOrdinary annuity END Annuity due BGN1624570 180030000000 360299500 240029950 14500Calculating down payment and amount to borrow 3400150000 62799514655892 3000090000 550Variables used in amortization Variable Description Default valueAmortization Calculations 8895148 616561700 104852203428 6001724476 3844574800 48275524Repeated cash flows Discounted Cash Flow AnalysisEntering cash flow data Single cash flowsConfirming and editing data 000*2200 300Inserting data 2500000Editing data Deleting dataNPV and IRR 3000000600000 Variables used in discounted cash flow analysisTo obtain IRR Procedure Key operation Display Bring up the initial disPlay in Normal mode To obtain NPVCalculating the present value of variable cash flows 2314662752 Variables used in bond calculations Setting the day-count methodBond Calculations To obtain yield to maturity Yield I/Y To obtain bond price Price PV720 65010000 15-2023Entering dates 9250728 Key operation Description Setting the depreciation methodDepreciation Calculations Variables used in depreciation calculationsPage Calculating straight-line depreciation 30005000000 To change EFF to APR 1956Conversion between APR and EFF To change APR to EFFVariables used in day and date calculations Day and Date CalculationsAnswer 228 days 10-200922800 Calculating number of daysCalculate Procedure Key operation Display Move to the last datePercent Change/Compound Interest Cal- culations 800000 750000011600000 5467Variables used in cost/sell/margin/markup calcula- tions 980000113 Cost/Sell/Margin/Markup CalculationsDetermining selling price 455609500 88842Calculating the breakeven point Breakeven CalculationsVariables used in breakeven calculations 33937 15000007580 12000Chain Calculations Constant Calculations4500 087071 5000Random coin Random FunctionsRandom numbers Random diceRandom integer 532Modify Function Key operation Sub-mode Display Entering statistical dataFor a single-variable data set For a two-variable data set x value y value JEntering statistical data 1000 2000 Quadratic regression calculation Statistical Calculations and VariablesSingle-variable statistical calculations Linear regression calculationsVariables Content Single-variable statistical calculation 5300017857 Linear regression calculation Quadratic regression calculation Discounted cash flow analysis Financial Calculation FormulasTVM solver Amortization calculationsBond calculations Day and date calculations Depreciation calculationsConversion between APR and EFF Breakeven calculations Statistical Calcula- tion FormulasCost/Sell/Margin/Markup calculations Calculation error Error Errors and Calculation RangesError codes and error types Syntax error ErrorInput value error Error Equation too long ErrorNo solution Error Display error ErrorFunction Calculation range Calculation ranges of functionsInteger When to replace the battery Battery ReplacementPriority Levels in Calculations Replacement procedureAutomatic power-off function Key operation and calculation priority SpecificationsFor more information about business/ financial calculators Index Formulas, 72-75 FV, 18, 22, 72 GRAD, 8, 9, 61 Memo
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