"BOND, CALLABLE, OPTIONAL REDEMPTION DATES. A BOND is a written contract to pay a fixed sum called the REDEMPTION VALUE on afuture specified date called the REDEMPTION DATE. FACEVALU is bond's face value.FACRATE% is its nominal or face interest rate. INVRATE% is the investor's desired interest rate. NUMYEARS is the term of the bond in years from purchase date. PAYMNINT is the payment interval in months (=1 for month, =3 for quarter, =6 for semiannully, =12 for annually). REDMVALU is bond's redemption value in dollars (not as percent of face value.) PERPAYMN is the periodic interest payment. PURPRICE is the purchase price. If a bond can be redeemed before the normal redemption date, the price the investor is willing to pay should always be based on the most unfavorable date as the redemption date. Such a strategy will guarantee the investor his/her expected return and perhaps more. INVPROF isinvestor's excess profit if bond is called at start of period PERIOD#. *** Answers to problems. *** Note: JJ is semiannually. Last int date is 7-1-92(a) Set AAMONTH1=7, ADAY1=1, AYEAR1=1992, BBMONTH2=9, BDAY2=20, BYEAR2=1992, FACEVALU=1000, FACRATE%=7.5, INVRATE%=9, NUMYEARS=7.5, PAYMNINT=6, PERIOD#=1, REDMVALU=1050 (1,000*1.05), purchase price is $964.43 and book value is $947.55. ||(a) A $1,000, 7.5%, JJ bond redeemable at 105 on Jan. 1, 2015, but callable on Jan. 1, 2000, is bought on Sept. 20, 1992 to yield 9% compoundedsemiann. Find the purchase price, and book value on Sept. 20, 1992. Type , to see answers. Type (F2) to return to helpfile. ''(c) Copyright PCSCC, Inc., 1993"
