Bond pricing & yield worksheet with answers

Free printable Bond pricing & yield worksheet: 6 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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1.Easy

A bond with a face value of €1 000 pays an annual coupon of 5% and matures in 8 years. The yield to maturity is 3%. Find the price P of the bond.

F = €1 000coupon = 5%YTM = 3%n = 8

P = €

2.Easy

A bond with a face value of €1 000 pays an annual coupon of 4.5% and matures in 7 years. The yield to maturity is 6%. Find the price P of the bond.

F = €1 000coupon = 4.5%YTM = 6%n = 7

P = €

3.Medium

A bond with a face value of €1 000 matures in 7 years and pays annual coupons. It sells for €731 when the yield to maturity is 7%. Find the coupon rate c in percent.

F = €1 000n = 7P = €731YTM = 7%

c = %

4.Medium

You buy a bond with 5 years to maturity (face value €1 000, annual coupon 2%) when its yield to maturity is 3.5%. One year later, just after receiving the first coupon, you sell it when the yield to maturity is 5%. Find your holding period return HPR in percent.

F = €1 000coupon = 2%n = 5y₀ = 3.5%y₁ = 5%

HPR = %

5.Hard

A bond with a face value of €1 000 and an annual coupon of 5% matures in 5 years and sells for €1 090. Find its yield to maturity YTM in percent.

F = €1 000coupon = 5%n = 5P = €1 090

YTM = %

6.Hard

A bond trades at €995 with a yield to maturity of 6% (annual compounding) and a Macaulay duration of 8.7 years. Use the modified duration to estimate the new price P if the yield rises by 25 basis points.

P₀ = €995y = 6%D = 8.7Δy = +25 bp

P = €

Answer key

1. P = 1140 €
2. P = 916.3 €
3. c = 2.009 %
4. HPR = −2.001 %
5. YTM = 3.033 %
6. P = 974.6 €

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