Carrying value of a bond

CFA Level I Fixed Income
#1

Hello all,

A 3-year bond, paying a coupon rate of 6% and has a YTM of 7%. Par Value = $,1000.

If I were to sell the bond 1 year early at time = t2 and wanted to calculate the carrying value.

Carrying value:1060/1.07 = $990.65

Why can’t I calculate the carrying value by just calculating the PV at time=t2?

N=2, PMT=60, I/Y=7% and FV=$1,000: I get $981.92 ?

#2

N=1

#3

Brain malfunction

#4

HI,

Carrying value based on remaining years of maturity.

So Calculate for N=1

My Value is comning = 940.1869

#5

Happens to the best of us.

It’s $980

#6

Hi,

I calculated it using following input on BA II calculator:

n=1 fv =1000 pmt=6 I/y = 7 cpt pv

Ans: 940.1869

What I am missing please correct?

#7

pmt = 6% x $1,000 = $60.

#8

Thanks Magician

#9

You’re welcome.

#10

At a year or less you can use money market convention to price it as well. = 1,060/1.07. Spare your calculator batteries.

#11

Hi Geo,

Ya , thanks.