CFA CFA Level 1 how to calculate the bond price with deferred coupon on BI calculator?

# how to calculate the bond price with deferred coupon on BI calculator?

• Author
Posts
• 45

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.

• 8

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

• 5

Can you please provide me with the keys and values you used on the calculator? • 10

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?

• 0

yes pls how do u calculate it on the ba 2 plus?