HP 12C User Manual page 2
Financial calculator bonds
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Also See for 12C:
- User manual (288 pages) ,
- Owner's handbook manual (213 pages) ,
- Reference manual (168 pages)
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HP 12C Bonds
Bonds
It is not unusual that either companies or governments themselves need extra funds to expand into new markets or raise
funds to pay for programs. In these cases, they typically need large quantities of money that the average bank cannot
provide. Raising money by issuing bonds to a public market is one solution.
By purchasing bonds, an investor becomes a creditor to the corporation or government. Many investors have at least
part of their portfolio invested in bonds. The issuer of a bond must pay the investor a "fee" (interest payments) for the
privilege of using his or her money. The interest rate is often referred to as the coupon, and the date on which the issuer
has to repay the amount borrowed (face value) is called the maturity date. The total return an investor receives if the
bond is held to maturity is equal to all the interest payments received plus any gain or loss. This is called the yield to
maturity, or YTM.
Bonds in the HP12C
The HP12C uses the following expression to compute a semiannual coupon with 6 months or less to maturity:
The HP12C uses the following expression to compute a semiannual coupon with more than 6 months to maturity (don't
worry - there is no need to understand the particulars of this long equation to work with bonds on the HP 12C):
=
PRICE
1
where:
DIM = days between issue and maturity date;
DSM = days between settlement date and maturity date;
DCS = days between beginning of coupon period and settlement date;
E = number of days in coupon period where settlement occurs;
DSC = E - DCS = days from settlement days to next 6-month coupon date.
N = number of semiannual coupons payable between settlement date and maturity date;
CPN = annual coupon rate (percentage);
YIELD = annual yield (percentage);
PRICE = dollar price per $100 par value;
RDV = redemption value.
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100
RDV
=
PRICE
DSM
+
100
RDV
DSC
−
+
N
1
YIELD
E
+
200
CPN
+
DCS
2
−
YIELD
×
E
2
CPN
N
∑
2
+
K
=
YIELD
K
1
+
1
200
- 2 -
CPN
×
E
2
Figure 1
DCS
CPN
−
×
DSC
E
−
+
1
E
Figure 2
HP 12C Bonds - Version 1.0
2
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