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  3. Bond Valuation and Analysis in R

Exercise

Value the 5% bond using the Baa yield you found

From the prior exercise, you found that the yield on comparable bonds is 4.29%.

Now that you know the yield, you can use this information to find the value of a Baa-rated bond on September 30, 2016 with a $100 par value, 5% coupon rate, and 5 years to maturity.

In this exercise, you will use the bondprc function you created in Chapter 1 to value the bond. The object you created in the previous exercise (baa_yield) is available in your workspace.

Instructions

100 XP
  • Use bondprc() to value your bond. Recall from Chapter One that the bondprc() function you created takes four arguments: the par value (p), the coupon rate (r), the time to maturity (ttm), and the yield of the bond (y).