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14: Additional Examples 215
File name : English-M02-1-040308(Print).doc Print data : 2004/3/9
Reference: Joseph M. Belth,
Life Insurance—A 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.
e
Sets semiannual bond
on 30/360 calendar.
@c
Clears variables; sets
CALL to 100.
3.162003
Stores today as
purchase date.
1.012031 Stores maturity date.
10.5 Stores coupon rate.
115.174
Stores price. Displays
only two decimal
places, but stores all
three.
Calculates yield to
maturity.