FRM: TI BA II+ to compute bond price given zero (spot) rate curve

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Thank you for sharing! I didn't know before we can use STO and RCL. It's really convenient! This is something I find useful too. To clear all 10 stored memories (numbers 0-9) using the CLR WORK function by pressing 2ND 0 2ND CE|C, essentially MEM + CLR WORK

clairejin
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Hi. Thanks for the clear explanation. When I try it on my BA II Plus there is a slight deviation from the final correct answer.

Consider this example:
Calculate the value of a 3-year, 5% annual-coupon bond, Cash Flow=50, Principal = 1000.
Spot Rates: 1 year:3%, 2 year: 4%, 3 year: 5%
According to the formula:
50/1.03 + 50/(1.04)^2 + 50/(1.05)^3 = 48.54+46.23+907.03 = $1001.80

However when I do this on the BAII as per your explanation, the price comes to 48.52+46.16+903.74 = $998.42 (which is incorrect)

Where am I going wrong.

EpicLightForce
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Thx!I learnt how to use the sto & rcl keys!

heruwang
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I didn't get the same answer when I did it on paper using the formula: PV= 10/1.08 + 10/(1.09)^2 + 10/(1.095)^3 ... I entered it in as instructed.. :/

desertrose