Eldora Ltd. recently issued deferred-coupon bonds for which no coupon payments will be paid in the first two years of the bond's life. Regular annual coupon payments at a rate of 9% will then be made until the bonds mature at the end of six years. The spot rates for various maturities are given in the following table. Time to Maturity Spot Rate 1 year . 8.0% 2 years 7.5% 3 years 7.0% 4 years 6.5% 5 years 6.0% 6 years 5.5% On the basis of these spot rates, the price of the bond today is closest to: 116.24. 108.20. 100.12.

I got C - 100.12.Price of bond = NPV of 4 coupon payments in years 3-6 + NPV of bond capital= 9/(1.055^6) + 9/(1.060^5) + 9/(1.065^4) + 9/(1.070^3) + 100/(1.055^6)=100.119

Can you please provide me with the keys and values you used on the calculator?

A CFA Level 1 Discussion About How To Calculate The Bond Price With Deferred Coupon On BI Calculator?

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This topic has 4 replies, 5 voices, and was last updated Apr-231:09 am by turos43.

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- mal
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  - CFA Level 1
  07 Jul 2019 at 9:35 pm
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  Eldora Ltd. recently issued deferred-coupon bonds for which no coupon payments will be paid in the first two years of the bond’s life. Regular annual coupon payments at a rate of 9% will then be made until the bonds mature at the end of six years. The spot rates for various maturities are given in the following table.
  
  Time to Maturity
  Spot Rate
  1 year . 8.0%
  2 years 7.5%
  3 years 7.0%
  4 years 6.5%
  5 years 6.0%
  6 years 5.5%
  
  On the basis of these spot rates, the price of the bond today is closest to:
  
  116.24.
  108.20.
  100.12.
- CFA_anon
  Participant
  08 Jul 2019 at 4:28 am
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  I got C – 100.12.
  
  Price of bond = NPV of 4 coupon payments in years 3-6 + NPV of bond capital
  = 9/(1.055^6) + 9/(1.060^5) + 9/(1.065^4) + 9/(1.070^3) + 100/(1.055^6)
  =100.119
  - MaryamBD
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    CFA Level 1
    13 May 2021 at 2:09 am
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    Can you please provide me with the keys and values you used on the calculator?
    - mikey
      Moderator
      
      13 May 2021 at 12:29 pm
      
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      I’m confused. I thought @kalalah‘s answer was pretty clear.
      
      Do you need help with calculating e.g. 9/(1.055^6) on the BA II Plus?
      - turos43
        Participant
        
        CFA Level 1
        12 Apr 2023 at 1:09 am
        
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        yes pls how do u calculate it on the ba 2 plus?
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