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$1000
By hand: PV = = $369.78
(1 + 0.051)
20
On the HP-12C:
n = 20
i = 5.1
PMT = 0
FV = 1000
So PV = -369.78
b. Take the above bond and add annual 4.8% coupons. What is the
price of this new bond?
$48 ⎛ ⎛ ⎞
20
1 ⎞ $1000
By hand: PV = ⎜⎜1 − ⎜ ⎟ ⎟⎟ + = $962.93
0.051 ⎝ ⎝ 1 + 0.051 ⎠ ( )
20
⎠ 1 + 0.051
On the HP-12C:
n = 20
i = 5.1
PMT = 48
FV = 1000
So PV = -962.93
2. What is the price of a 3-year, U.S. corporate bond with 3.4% coupon, a 3.6%
yield, and a $1,000 face value? Remember that corporate bonds, just like
Treasury bonds, pay semi-annual coupons.
$17 ⎛ ⎛ ⎞
6
1 ⎞ $1000
By hand: PV = ⎜⎜ 1 − ⎜ ⎟ ⎟⎟ + = $994.36
0.018 ⎝ ⎝ 1 + 0.018 ⎠ ( )
6
⎠ 1 + 0.018
On the HP-12C: