Bond Calculations

Free SOA Exam FM (Financial Mathematics) lesson in Bonds. 18 min read, ~2,651 words.

Six parameters linked by the price formula. Yield needs iteration;, have closed forms. Yield: no closed form. Bond salesman's formula, "average income over average investment," then verify. Price linear in coupon: each 1% of coupon adds; a coupon equal to the yield prices at par. Book value:. Uses the original...