The current price of a bond is the sum of the present value of its remaining coupons and principal. In our example, we have a bond which has a face value of £100, a coupon rate of 7%, 5 years to maturity and a yield to maturity of 5%. We’re also going to assume that interest payments are annual. There are two ways we can calculate the price of this bond in Excel. Firstly, we can calculate the price manually by building a calculation table. The second way is to use the PV function which calculate the bond price automatically.
Calculate The Price Of A Bond With Semi Annual Coupon Payments In Excel:
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Calculation Table: (0:47)
PV Function: (2:17)