Jason Chen bought $114,000 face value of the
TB125 series Australian treasury bond on 28
June 2013. This is a fixed coupon bond paying
interest every half year.
(a) Assuming Jason holds the bond through to
maturity, what are his cash flows? List or tabulate
the dates and signed cash flows (negative for
outflows, positive for inflows).
(b) Confirm these cash flows lead to the
yield-to-maturity of 2.470 specified for that bond.
Show two more decimal places. If your technique
is correct you should be able to calculate any of
the yields given. Hint: use XIRR in Excel and note
the yield being quoted is nominal based on a
six-month period.
using this table as well from this website:
http://www.rba.gov.au/fin-services/bond ... index.html
valuing bonds
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bigunit99
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bigunit99
Re: valuing bonds
someone could you please help me with this?
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Pointedstick
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Re: valuing bonds
You want us to do your homework for you? 
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Ad Orientem
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Re: valuing bonds
Being quite horrible at math my advice to Mr. Chen is to stick to TLT or the Australian equivalent. I really don't mind paying someone 15 cents on every ten dollars to do all of that for me.
Last edited by Ad Orientem on Thu Sep 05, 2013 1:45 pm, edited 1 time in total.
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Re: valuing bonds
Even if the manager of TLT is loaning the safest paper in the world to pirates betting against it?Ad Orientem wrote: Being quite horrible at math my advice to Mr. Chen is to stick to TLT or the Australian equivalent. I really don't mind paying someone 15 cents on every ten dollars to do all of that for me.
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mortalpawn
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Re: valuing bonds
I'm not an expert in Australian bonds, but I believe if you look up the face value of the bond (its on the bond or you can look it up online) and start with that you are part way there.
Now basically the way Australian bonds work is that they pay you a fixed percentage each year as a dividend (you claimed 2.47% annually, paid twice a year or about half of that 2.47% every 6 months) until maturity. At maturity you are also paid back the face value of the bond.
So the rough math is you will receive 1.235% of the face value every six months until maturity, plus get the face value back when it matures.
That's it!
Now basically the way Australian bonds work is that they pay you a fixed percentage each year as a dividend (you claimed 2.47% annually, paid twice a year or about half of that 2.47% every 6 months) until maturity. At maturity you are also paid back the face value of the bond.
So the rough math is you will receive 1.235% of the face value every six months until maturity, plus get the face value back when it matures.
That's it!