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82 Section 4: Additional Financial Functions
File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 82 of 275
Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm
Bond Calculations
The hp 12c platinum enables you to solve for bond price (and the interest accrued
since the last interest date) and the yield to maturity.
*
The
fE
and
fS
calculations are done assuming a semiannual coupon payment and using an
actual/actual basis (such as for U.S. Treasury bonds and U.S. Treasury notes). In
accordance with market convention, prices are based on a redemption (par) value
of 100.
To calculate bond price and yield for a 30/360 bond (that is, using the basis of a
30-day month and a 360-day year —such as for municipal bonds, corporate
bonds, and to calculate bond price for bonds with an annual coupon payment),
refer to Section 16: Bonds.
Bond Price
1. Enter the desired yield to maturity (as a percentage), using ¼.
2. Enter the annual coupon rate (as a percentage), using P.
3. Key in the settlement (purchase) date (as described on page 37), then press
\.
4. Key in the maturity (redemption) date.
5. Press fE.
The price is shown in the display and also is stored in the PV register. The interest
accrued since the last interest date is held inside the calculator: to display the
interest, press
~
; to add the interest to the price, press
+
in RPN mode and
+~}
in ALG mode.
Example:
What price should you pay on April 28, 2004 for a 6.75% U.S.
Treasury bond that matures on June 4, 2018, if you want a yield of 4.75%.
Assume that you normally express dates in the month-day-year format.
Keystrokes
(RPN mode)
Display
4.75
¼
4.75
Enters yield to maturity.
6.75
P
6.75
Enters coupon rate.
gÕ
6.75
Sets date format to month-day-year.
4.282004
\
4.28
Enters settlement (purchase) date.
6.042018
6.042018
Enters maturity (redemption) date.
fE
120.38
Bond price (as a percent of par).
+
123.07
Total price, including accrued interest.
*
All bond calculations are performed in accordance with. the Securities Industry Association’s
recommendations as contained in Jan Mayle, TIPS Inc., Standard Securities Calculation
Methods, Volume 1, Third Edition, Securities Industry Association Inc., New York, 1993.