2024 CFA Level I Exam: CFA Discussion Topic: Bond Yield

CFA Exams
Forums
General Forum
Topic: Bond Yield

Author	Topic: Bond Yield
prem1pre @2015-01-21 17:22:41	Could you please clarify the below statement. 6% 20 -year bond. If the yield investors require to buy this bond is 6%, the price of the bond would be 100. However, if the reqd yield increased to 6.5% the price of the bond would decline to 94.4479. Instead, the yield declines from 6% to 5.5%, the bonds price will rise by 6.02% to 106.0195.. How this is calculated..Is the intial 100$ is the par value or the initial price of the bond..Im missing something that causes this confusion..Any clarifications would be appreciated.. Thanks, Prem

Author

Topic: Bond Yield

prem1pre
@2015-01-21 17:22:41

Could you please clarify the below statement.

6% 20 -year bond. If the yield investors require to buy this bond is 6%, the price of the bond would be 100. However, if the reqd yield increased to 6.5% the price of the bond would decline to 94.4479. Instead, the yield declines from 6% to 5.5%, the bonds price will rise by 6.02% to 106.0195..

How this is calculated..Is the intial 100$ is the par value or the initial price of the bond..Im missing something that causes this confusion..Any clarifications would be appreciated..

Thanks,
Prem

CFA Discussion Topic: Bond Yield

To post a new topic or reply to a topic, please log in or register for a free user account.

I used your notes and passed ... highly recommended!

CFA Discussion Topic: Bond Yield

Lauren