Premium and Discount Amortization Schedules
Free SOA Exam FM (Financial Mathematics) lesson in Bonds. 10 min read, ~1,564 words.
Premium writes down, discount writes up. Book value marches from the purchase price to the redemption value. Each period: interest earned; amortization. The adjustments are geometric with ratio, and they sum to. Book value any time:, at the original yield. Taxable interest is, not the coupon. The amortization is a...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 4a
- 4b
- 4c
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