Reference: Joseph M. Belth, Life InsuranceA Consumer’s Handbook, Indiana University Press, 1973, p. 234.

Bonds

Example: Yield to Maturity and Yield to Call. On March 16, 2003 you consider the purchase of a $1,000 bond that was issued on January 1, 2001. It has a 10.5% semiannual coupon using a 30/360 calendar, and matures on January 1, 2031. The bond is callable on January 1, 2006 at 110 (that is, $1,100). The bond is now selling at 115.174 (that is, $1,151.74). Determine both the yield to maturity and the yield to call for this bond.

First, calculate the yield to maturity:

Keys:

 

 

Display:

Description:

 

 

 

 

 

 

 

 

 

Displays BOND menu.

"

 

y

!"

 

 

 

 

 

 

 

 

Sets semiannual bond

z

 

"

 

 

 

 

 

 

 

%(?%'( FH0;1<<419"

on 30/360 calendar.

ƒ

e

 

 

@c

 

 

%(?%'( FH0;1<<419"

Clears variables; sets

 

 

 

 

 

 

 

 

 

 

 

CALL to 100.

 

 

 

 

 

 

3.162003

{

FH::8"

Stores today as

 

 

 

 

 

 

 

 

 

 

(%?#'?$((% F4<"

purchase date.

 

 

 

 

 

 

1.012031

01:8(#?(#?$(%# CHA"

Stores maturity date.

 

 

 

 

10.5

}

75<68#(&.("

Stores coupon rate.

 

 

 

 

 

 

Stores price. Displays

)

 

 

 

 

"

 

 

115.174

*

52;7H8##.&#-"

only two decimal

 

 

 

 

 

 

 

 

 

 

 

places, but stores all

 

 

 

 

 

 

 

 

 

 

 

three.

 

 

 

@9A68,&(("

Calculates yield to

"

 

 

 

 

 

 

 

 

 

 

 

 

 

maturity.

14: Additional Examples 215

File name : 17BII-Plus-Manual-E-PRINT-030709

Print data : 2003/7/11