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  3. Bond Valuation and Analysis in Python

Exercise

Impact of bond yields on price

In the financial markets, interest rates are constantly changing, and these changes will influence bond prices as the interest rate you use to discount the cash-flows of the bond (the yield) changes.

To get a better feel for how the prices of bonds behave with respect to yields, you will price a bond using a set yield to maturity, then price the same bond using both a higher and lower yield to maturity and see how this affects the bond price.

numpy_financial has already been imported for you as npf.

Instructions 1/3

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  • 1
    • Find the price of a 10 year bond with a face value of USD 100, annual coupon of 3%, yield of 4%, and print the result.
  • 2
    • Find the price of a 10 year bond with a face value of USD 100, annual coupon of 3%, yield of 3%, and print the result.
  • 3
    • Find the price of a 10 year bond with a face value of USD 100, annual coupon of 3%, yield of 5%, and print the result.