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 zero-coupon bond pays €1 000 in 7 years and nothing before. The yield to maturity is 3.5% per year. Find the price P of the bond.

F = €1 000n = 7YTM = 3.5%

P = €

2.Easy

A bond with a face value of €1 000 pays an annual coupon of 4% and matures in 10 years. The yield to maturity is 7%. Find the price P of the bond.

F = €1 000coupon = 4%YTM = 7%n = 10

P = €

3.Medium

A bond with a face value of €1 000 pays a 4.5% annual coupon in two half-yearly payments and matures in 6 years. The yield to maturity is 9% per year. Find the price P of the bond.

F = €1 000coupon = 4.5%YTM = 9%n = 6

P = €

4.Medium

You buy a bond with 9 years to maturity (face value €1 000, annual coupon 8%) when its yield to maturity is 2.5%. One year later, just after receiving the first coupon, you sell it when the yield to maturity is 3%. Find your holding period return HPR in percent.

F = €1 000coupon = 8%n = 9y₀ = 2.5%y₁ = 3%

HPR = %

5.Hard

A bond trades at €925 with a yield to maturity of 4% (annual compounding) and a Macaulay duration of 3.2 years. Use the modified duration to estimate the new price P if the yield rises by 100 basis points.

P₀ = €925y = 4%D = 3.2Δy = +100 bp

P = €

6.Hard

A bond with a face value of €1 000 and an annual coupon of 8% matures in 7 years and sells for €950. Find its yield to maturity YTM in percent.

F = €1 000coupon = 8%n = 7P = €950

YTM = %

Answer key

1. P = 786 €
2. P = 789.3 €
3. P = 794.8 €
4. HPR = −0.5154 %
5. P = 896.5 €
6. YTM = 8.993 %

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