Ton Duc Thang University

Finance and Banking Faculty

Corporate Finance Department

FOUNDATIONS OF FINANCE
CHAPTER 3
UNDERSTANDING INTEREST RATE
COURSE CODE: B02084

Prepared by: Corporate Finance Department

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 Page 3

Exercise

• At the beginning date of 2022, Ms.

Nhu deposited 100 million dong at
Agribank, with deposit rate is 6%
per year. What would she receive
total amount (original value and
interest value) at the end of 2022?

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 TOPICS COVERED IN Page 4

CHAPTER 2
• Future Values and Present Values
• Present Value of Single Cashflow
• Net Present Value
• Present Value of Multiple Cashflow
• Present Value of Annuities
• Present Value of A bond

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 Future Values and
Present Values
a dollar today is Future Value
always worth more
than a dollar Amount to which
tomorrow
an investment will
grow after earning
Present Value interest

Value today of
a future cash
flow.

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B02037 – Chapter 2 – How to calculate present value?
 Future Values and Present
Values
Present value = 1 year???
100$

Future Value of $100 = FV

r% / year n year???
0 1 2 3 4 5 … n-1 n

100 FV1 = 100 +

x (1
100+ xr)^1
r FVn?

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B02084 –2Chapter to calculate
3: Understanding present
interest rate value? Page 5
 Future Values and Present
Values
Present value = 1 year???
100$

Future Value of $100 = FV

n year???

FV: Future value of a cash flow at year n

n: number of years
r: discount rate

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2Chapter to calculate
3: Understanding present
interest rate value? Page 6
 Future Values and Present
Values

Example – FV:
What is the future value of $100 if interest is
compounded annually at a rate of 7% for two
years?
r = 7% / year
0 1 2

$100 =FV2
FV1 FV1 ==+
100 $100 x(1+7%)^2
7%= 107 +=107
100 xFV2
$107 $114.49
x 7%
FV2?

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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 7
 Future Values and Present
Values

1/27/2024 B02037 – Chapter 2 – How

B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 8
 Present Value of Single
Cashflow

1/27/2024 B02037 – Chapter 2 – How

B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 9
 Review MCQ
The concept of ________ is based on the
common-sense notion that a dollar paid to
you in the future is less valuable to you than
a dollar today.
*a/ present value
b/ future value
c/ interest
d/ deflation

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 Review MCQ
A credit market instrument that provides the
borrower with an amount of funds that must
be repaid at the maturity date along with an
interest payment is known as a
*a/ simple loan.
b/ fixed-payment loan.
c/ coupon bond.
d/ discount bond.

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 Review MCQ
An increase in the time to the promised
future payment ________ the present value
of the payment.
*a/ decreases
b/ increases
c/ has no effect on
d/ is irrelevant to

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 Review MCQ
What is the present value of $500.00 to be
paid in two years if the interest rate is 5
percent?
*a/ $453.51
b/ $543.51
c/ $354.51
d/ $423.51

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 Review MCQ
If the amount payable in two years is $2,420
for a simple loan at 10 percent interest, the
loan amount is
*a/ $2,000.
b/ $2,200.
c/ $1,000.
d/ $1,100.

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 Net Present Value
Valuing an Office Building
Step 1: Forecast cash flows
Cost of building = C0 = 370,000
Sale price in Year 1 = C1 = 420,000

Step 2: Estimate opportunity cost of capital

If equally risky investments in the capital market
offer a return of 5%, then
Cost of capital = r = 5%

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B02037 – Chapter 2 – How to calculate present value?
 Net Present Value

Step 3: Discount future cash flows

PV = = = 400,000
C1 420 , 000
(1+ r ) (1+ .05 )

Step 4: Go ahead if PV of payoff exceeds

investment
NPV = 400 ,000 − 370 ,000
= 30 ,000

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B02037 – Chapter 2 – How to calculate present value?
 Net Present Value

NPV = PV – C0
Co: Initial Investment
NPV > 0: Accept
NPV < 0: Reject
NPV = 0: Depend

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B02037 – Chapter 2 – How to calculate present value?
 Page 31

Net Present Values

- $370,000

$20,000 $ 420,000

Present Value Year

0 1 2
Year 0
-$370,000
20,000/1.12 = $17,900
420,000/1.122 = $334,800
Total = - $17,300

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B02037 – Chapter 2 – How to calculate present value?
 Net Present Values

C0: Initial investment (C0 < 0)

C(i): Cashflow occurs at the end of year (i)
r: discount rate per year
n: number of year

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 Present Value of Multiple
Cashflow
For multiple periods we have the
Discounted Cash Flow (DCF) formula

PV: Present value

C(i): Cashflow occurs at the end of year (i)
r: discount rate per year
n: number of year
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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 20
 Review MCQ
The present value of a fixed-payment loan is
calculated as the ________ of the present
value of all cash flow payments.
*a/ sum
b/ difference
c/ multiple
d/ log

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 Review MCQ
The present value of an expected future
payment ________ as the interest rate
increases.
*a/ falls
b/ rises
c/ is constant
d/ is unaffected

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 Review MCQ
If a security pays $55 in one year and $133
in three years, its present value is $150 if the
interest rate is
*a/ 10 percent.
b/ 12 percent.
c/ 14 percent.
d/ 16 percent.

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 Present Value of Annuity
C1 = C2 = C3 = … = Cn = C

PV: Present value

C: Cashflow occurs at the end of each year
r: discount rate per year
n: number of year
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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 24
 Review MCQ
A credit market instrument that requires the
borrower to make the same payment every
period until the maturity date is known as a
*a/ fixed-payment loan.
b/ simple loan.
c/ coupon bond.
d/ discount bond.

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 Review MCQ
A fully amortized loan is another name for
*a/ a fixed-payment loan.
b/ a simple loan.
c/ a commercial loan.
d/ an unsecured loan.

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 Review MCQ
Which of the following are TRUE of fixed
payment loans?
*a/ Installment loans and mortgages are
frequently of the fixed payment type.
b/ The borrower pays interest periodically
and the principal at the maturity date.
c/ Commercial loans to businesses are often
of this type.
d/ The borrower repays both the principal
and interest at the maturity date.
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 Present Value of Bond
Annual Coupon: C = coupon rate x Face Value
Yield-to-maturity (YTM) = r (%)

PV: Present value of a bond

C: coupon received at the end of every year
r: YTM per year
n: number of year
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B02084 – Chapter 3: Understanding
to calculateinterest rate
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 Present Value of Bond
Semi-Annual Coupon: Tiền lãi trả 6 tháng 1 lần
C = coupon rate x Face Value
Yield-to-maturity (YTM) = r (%)

PV: Present value of a bond

C: coupon received at the end of every year
r: YTM per year
n: number of year

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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 29
 Review MCQ
A credit market instrument that pays the
owner a fixed coupon payment every year
until the maturity date and then repays the
face value is called a
*a/ coupon bond.
b/ discount bond.
c/ simple loan.
d/ fixed-payment loan.

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 Review MCQ
A ________ pays the owner a fixed coupon
payment every year until the maturity date,
when the ________ value is repaid.
*a/ coupon bond; face
b/ discount bond; face
c/ coupon bond; discount
d/ discount bond; discount

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 Review MCQ
The dollar amount of the yearly coupon
payment expressed as a percentage of the
face value of the bond is called the bond's
*a/ coupon rate.
b/ maturity rate.
c/ face value rate.
d/ payment rate.

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 Review MCQ
The ________ is the final amount that will be
paid to the holder of a coupon bond.
*a/ face value
b/ present value
c/ discount value
d/ coupon value

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 Review MCQ
A discount bond
*a/ pays the bondholder the face value at
maturity.
b/ pays all interest and the face value at
maturity.
c/ pays the face value at maturity plus any
capital gain.
d/ pays the bondholder a fixed amount every
period and the face value at maturity.

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 Review MCQ
The interest rate that equates the present
value of payments received from a debt
instrument with its value today is the
*a/ yield to maturity.
b/ real interest rate.
c/ simple interest rate.
d/ current yield.

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 Review MCQ
A ________ is bought at a price below its
face value, and the ________ value is repaid
at the maturity date.
*a/ discount bond; face
b/ coupon bond; discount
c/ discount bond; discount
d/ coupon bond; face

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 Review MCQ
Economists consider the ________ to be the
most accurate measure of interest rates.
*a/ yield to maturity.
b/ nominal interest rate.
c/ simple interest rate.
d/ current yield.

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 Review MCQ
A discount bond is also called a ________
because the owner does not receive periodic
payments.
*a/ zero-coupon bond
b/ municipal bond
c/ corporate bond
d/ consol

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 Review MCQ
Prices and returns for ________ bonds are
more volatile than those for ________
bonds, everything else held constant.
*a/ long-term; short-term
b/ short-term; long-term
c/ short-term; short-term
d/ long-term; long-term

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 Review MCQ
Which of the following are TRUE for a coupon
bond?
*a/ When the coupon bond is priced at its face
value, the yield to maturity equals the coupon rate.
b/ The price of a coupon bond and the yield to
maturity are positively related.
c/ The yield to maturity is greater than the coupon
rate when the bond price is above the par value.
d/ The yield is less than the coupon rate when the
bond price is below the par value.

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 Review MCQ
The ________ of a coupon bond and the
yield to maturity are inversely related.
*a/ price
b/ par value
c/ maturity date
d/ term

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 Review MCQ
The price of a coupon bond and the yield to
maturity are ________ related; that is, as the
yield to maturity ________, the price of the
bond ________.
*a/ negatively; rises; falls
b/ positively; rises; rises
c/ negatively; falls; falls
d/ positively; rises; falls

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 Review MCQ
The yield to maturity is ________ than the
________ rate when the bond price is
________ its face value.
*a/ greater; coupon; below
b/ greater; perpetuity; above
c/ less; perpetuity; below
d/ greater; coupon; above

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 Review MCQ
If a $1,000 face value coupon bond has a
coupon rate of 3.75 percent, then the coupon
payment every year is
*a/ $37.50
b/ $370.50
c/ $3.75
d/ $73.50

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 Review MCQ
A $1,000 face value coupon bond with a $60
coupon payment every year has a coupon
rate of
*a/ 6 percent.
b/ 60 percent.
c/ 0.6 percent.
d/ 600 percent.

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 Review MCQ
A $10,000 - 8 percent coupon bond that sells
for $10,000 has a yield to maturity of
*a/ 8 percent.
b/ 0.8 percent.
c/ 80 percent.
d/ 16 percent.

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 Review MCQ
Which of the following bonds would you
prefer to be buying?
*a/ a $10,000 face-value security with a 10
percent coupon selling for $9,000
b/ a $10,000 face-value security with a 7
percent coupon selling for $10,000
c/ a $10,000 face-value security with a 9
percent coupon selling for $10,000
d/ a $10,000 face-value security with a 10
percent coupon selling for $10,000
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 Review MCQ
Which of the following are TRUE concerning the
distinction between interest rates and returns?
*a/ The rate of return on a bond will not necessarily
equal the interest rate on that bond.
b/ The return can be expressed as the difference
between the current yield and the rate of capital
gains.
c/ The rate of return will be greater than the interest
rate when the price of the bond falls during the
holding period.
d/ The return can be expressed as the sum of the
discount yield and the rate of capital gains.
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 Review MCQ
The return on a 5 percent coupon bond that
initially sells for $1,000 and sells for $950
next year is
*a/ 0 percent.
b/ 5 percent.
c/ -0.5 percent.
d/ -10 percent.

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 Review MCQ
Which of the following $1,000 face-value
securities has the highest yield to maturity?
*a/ a 5 percent coupon bond with a price of
$600
b/ a 5 percent coupon bond with a price of
$800
c/ a 5 percent coupon bond with a price of
$700
d/ a 5 percent coupon bond with a price of
$900
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 Present Value of Perpetuity
C1 = C2 = C3 = … = Cn = C

PV: Present value

C: Cashflow occurs at the end of each year
r: discount rate per year
n: number of year
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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 51
 Present Value of Perpetuity
When n comes to forever

PV or C0: Present value

C1: Cashflow occurs at the end of each
year (starting in year 1)
r: discount rate per year

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B02084 – Chapter 3: Understanding
to calculateinterest rate
present value? Page 52
 Review MCQ
The interest rate on a consol equals the
*a/ coupon payment divided by the price.
b/ price times the coupon payment.
c/ price divided by the coupon payment.
d/ coupon payment plus the price.

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 Review MCQ
A consol paying $20 annually when the
interest rate is 5 percent has a price
of______________
*a/ $400.
b/ $300.
c/ $100.
d/ $200.

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 Four Types of Credit Market
Instruments
• Simple Loan
• Fixed Payment Loan
• Coupon Bond
• Discount Bond

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 Yield to Maturity

• Yield to maturity: the interest rate that

equates the present value of cash flow
payments received from a debt instrument with
its value today

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 Yield to Maturity on a Simple
Loan

PV = amount borrowed = $100

CF = cash flow in one year = $110
n = number of years = 1
$110
$100 =
(1 + i )1
(1 + i ) $100 = $110
$110
(1 + i ) =
$100
i = 0.10 = 10%
For simple loans, the simple interest rate equals the
yield to maturity

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 Fixed-Payment Loan

The same cash flow payment every period

throughout the life of the loan
LV = loan value
FP = fixed yearly payment
n = number of years until maturity

FP FP FP FP
LV = + + + . . . +
1 + i (1 + i )2 (1 + i )3 (1 + i )n

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 Coupon Bond (1 of 4)

Using the same strategy used for the fixed-

payment loan:
P = price of coupon bond
C = yearly coupon payment
F = face value of the bond
n = years to maturity date
C C C C F
P= + + +. . . + +
1+ i (1+ i )2 (1+ i )3 (1+ i )n (1+ i )n

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 Coupon Bond (2 of 4)

• When the coupon bond is priced at its face

value, the yield to maturity equals the coupon
rate.
• The price of a coupon bond and the yield to
maturity are negatively related.
• The yield to maturity is greater than the coupon
rate when the bond price is below its face
value.

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 Coupon Bond (3 of 4)

Table 1 Yields to Maturity on a 10%-Coupon-Rate

Bond Maturing in Ten Years (Face Value = $1,000)

Price of Bond ($) Yield to Maturity (%)

1,200 7.13
1,100 8.48
1,000 10.00
900 11.75
800 13.81

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 Coupon Bond (4 of 4)
• Consol or perpetuity: a bond with no maturity date
that does not repay principal but pays fixed coupon
payments forever
P = C / ic
Pc = price of the consol
C = yearly interest payment
Ic = yield to maturity of the consol
can rewrite above equation as this: ic = C/Pc
For coupon bonds, this equation gives the current
yield, an easy to calculate approximation to the yield
to maturity
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 Discount Bond

For any one year discount bond

F − P
i=
P
F = Face value of the discount bond
P = Current price of the discount bond

The yield to maturity equals the increase in price over the

year divided by the initial price.

As with a coupon bond, the yield to maturity is negatively

related to the current bond price.
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 The Distinction Between Interest
Rates and Returns (1 of 4)

• Rate of Return:
The payments to the owner plus the change in value
expressed as a fraction of the purchase price
C P − Pt
RET = + t +1
Pt Pt
RET = return from holding the bond from time t to time t + 1
Pt = price of bond at time t
Pt +1 = price of the bond at time t + 1
C = coupon payment
C
= current yield = ic
Pt
Pt +1 − Pt
= rate of capital gain = g
Pt
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 The Distinction Between Interest
Rates and Returns (2 of 4)

• The return equals the yield to maturity only if the

holding period equals the time to maturity.
• A rise in interest rates is associated with a fall in
bond prices, resulting in a capital loss if time to
maturity is longer than the holding period.
• The more distant a bond’s maturity, the greater
the size of the percentage price change
associated with an interest-rate change.
• Interest rates do not always have to be positive
as evidenced by recent experience in Japan and
several European states.
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 The Distinction Between Interest
Rates and Returns (3 of 4)
• The more distant a bond’s maturity, the lower
the rate of return the occurs as a result of an
increase in the interest rate.
• Even if a bond has a substantial initial interest
rate, its return can be negative if interest rates
rise.

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 The Distinction Between Interest
Rates and Returns (4 of 4)
Table 2 One-Year Returns on Different-Maturity 10%-Coupon-
Rate Bonds When Interest Rates Rise from 10% to 20%
(1) (2) (3) (5)
Years to Maturity Initial Initial (4) Rate of (6)
When Bond Is Current Price Price Next Capital Gain Rate of Return
Purchased Yield (%) ($) Year* ($) (%) [col (2) + col (5)] (%)
30 10 1,000 503 −49.7 −39.7
20 10 1,000 516 −48.4 −38.4
10 10 1,000 597 −40.3 −30.3
5 10 1,000 741 −25.9 −15.9
2 10 1,000 917 −8.3 +1.7
1 10 1,000 1,000 0.0 +10.0

*Calculated with a financial calculator, using Equation 3.

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 Maturity and the Volatility of
Bond Returns: Interest-Rate
Risk
• Prices and returns for long-term bonds are
more volatile than those for shorter-term
bonds.
• There is no interest-rate risk for any bond
whose time to maturity matches the holding
period.

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 The Distinction Between Real
and Nominal Interest Rates
• Nominal interest rate makes no allowance for
inflation.
• Real interest rate is adjusted for changes in
price level so it more accurately reflects the
cost of borrowing.
• Ex ante real interest rate is adjusted for expected
changes in the price level
• Ex post real interest rate is adjusted for actual
changes in the price level

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 Fisher Equation

i = ir +  e
i = nominal interest rate
ir = real interest rate
 e = expected inflation rate
When the real interest rate is low,
there are greater incentives to borrow and fewer incentives to lend.
The real interest rate is a better indicator of the incentives to
borrow and lend.

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 Figure 1 Real and Nominal
Interest Rates (Three-Month
Treasury Bill), 1953–2017

Sources: Nominal rates from Federal Reserve Bank of St. Louis FRED database:
http://research.stlouisfed.org/fred2/. The real rate is constructed using the procedure outlined in
Frederic S. Mishkin, “The Real Interest Rate: An Empirical Investigation,” Carnegie-Rochester
Conference Series on Public Policy 15 (1981): 151–200. This procedure involves estimating expected
inflation as a function of past interest rates, inflation, and time trends, and then subtracting the
expected inflation measure from the nominal interest rate.

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 Review MCQ
The ________ is defined as the payments to
the owner plus the change in a security's
value expressed as a fraction of the
security's purchase price.
*a/ rate of return
b/ yield rate
c/ yield to maturity
d/ current yield

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 Review MCQ
The sum of the current yield and the rate of
capital gain is called the
*a/ rate of return
b/ yield rate
c/ yield to maturity
d/ current yield

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 Review MCQ
The nominal interest rate minus the expected
rate of inflation
*a/ defines the real interest rate.
b/ is a less accurate measure of the
incentives to borrow and lend than is the
nominal interest rate.
c/ is a less accurate indicator of the tightness
of credit market conditions than is the
nominal interest rate.
d/ defines the discount rate.
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 Review MCQ
When the ________ interest rate is low,
there are greater incentives to ________ and
fewer incentives to ________.
*a/ real; borrow; lend
b/ market; lend; borrow
c/ nominal; lend; borrow
d/ real; lend; borrow

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 Review MCQ
The ________ states that the nominal
interest rate equals the real interest rate plus
the expected rate of inflation.
*a/ Fisher equation
b/ Keynesian equation
c/ Monetarist equation
d/ Marshall equation

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 Review MCQ
An increase in the time to the promised
future payment ________ the present value
of the payment.
*a/ decreases
b/ increases
c/ has no effect on
d/ is irrelevant to

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 Review MCQ
If the nominal rate of interest is 2 percent,
and the expected inflation rate is -10 percent,
the real rate of interest is
*a/ 12 percent.
b/ 10 percent.
c/ 2 percent.
d/ -8 percent.

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 Review Constructed
Questions
1. Dạng bài tập về Giá trị hiện tại – Giá trị
tương lai
2. Dạng bài tính giá hiện tại của trái phiếu
3. Dạng bài tính tỷ suất sinh lợi đến ngày
đáo hạn (Yield-to-maturity) của trái phiếu
4. Dạng bài tập tổng hợp về Trái phiếu

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 79

 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT1:
Assume that you just hit the $30
million Jackpot in the New York
Lottery, which promises you a
payment of $7.5 million for the next
four years. You are clearly excited,
but have you really won $30 million?
(if interest rate is 8.5%)
1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 80
 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT2:
You decide to purchase a new home and
need a $ 150,000 mortgage. You take out
a loan from the bank that has an interest
rate of 8.5%. What is the yearly payment
to the bank to pay off the loan in twenty-
five years?

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 81

 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT3:
You decide to purchase a new home and
need a $ 2,500,000 mortgage. You take
out a loan from the bank that has an
interest rate of 8.5%. What is the yearly
payment to the bank to pay off the loan in
twenty years?

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 82

 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT4:
The state lottery advertises a jackpot prize
of $30 million, paid in 4 equal installments
over 4 years, at the end of each year. If
interest rates are 8.5% what is the true
value of the lottery prize?

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 83

 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT5:
The state lottery advertises a jackpot prize
of $295.7 million, paid in 25 equal
installments over 25 years, at the end of
each year. If interest rates are 5.9% what
is the true value of the lottery prize?

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 84

 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT6:
A lottery claims their grand price is $50
million, payable over 8 years at $6.25
million per year. If the first payment is
made immediately, what is this grand
prize really worth? Use an interest rate of
9%.

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 Dạng bài tập về Giá trị hiện tại
– Giá trị tương lai

BT7:
A lottery claims their grand price is
$198.25 million, payable over 5 years at
$39.65 million per year. If the first
payment is made immediately, what is
this grand prize really worth? Use an
interest rate of 9%.

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 Dạng bài tính giá hiện tại của
trái phiếu

BT1:
A government bond issued in
Germany has a coupon rate of 5%,
face value of euros 100 and maturing
(đáo hạn) in five years. The interest
payments are made annually.
Calculate the price of the bond (in
euros) if the yield to maturity is 3.5%.
(=> 106.77 euros)
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 Dạng bài tính giá hiện tại của
trái phiếu

BT2:
A 3-year bond with 10% coupon rate
and $1,000 face value yields 8% APR
(Annual percentage rate). Assuming
annual coupon payment, calculate the
price of the bond. (=> $1,051.54)

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 Dạng bài tính giá hiện tại của
trái phiếu

BT3:
A three-year bond has 8.0% coupon
rate and face value of $1,000. If the
yield to maturity on the bond is 10%,
calculate the price of the bond
assuming that the bond makes semi-
annual coupon interest payments. (=>
$949.24)
1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 89
 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT1:
A four-year bond has an 8% coupon
rate and a face value of $1,000. If the
current price of the bond is $878.31,
calculate the yield to maturity of the
bond (assuming annual interest
payments). (=> 12%)

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 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT2:
A 5-year bond with 10% coupon rate
and $1,000 face value is selling for
$1,123. Calculate the yield to maturity
on the bond assuming annual interest
payments. (=> 7.0%)

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 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT3:
A government bond issued in Germany
has a coupon rate of 5%, face value of
euros 100 and maturing in five years.
The interest payments are made
annually. Calculate the yield to maturity
of the bond (in euros) if the price of the
bond is 106 euros. (=> 3.66%)
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 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT4:
If a security pays $110 next year (năm
sau) and $121 the year after that (năm
sau đó nữa), what is its yield to maturity
if it sells for $200? (=> 10%)

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 93

 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT5:
If a $10,000 face-value discount bond
(trái phiếu chiết khấu) maturing in one
year is selling for $5,000, then its yield
to maturity is (=> 100%)

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 94

 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT6:
What is the rate of return on a 5 percent
coupon bond that initially sells for
$1,000 and sells for $1,200 next year?
(=> 25%)

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 95

 Dạng bài tính tỷ suất sinh lợi đến
ngày đáo hạn (Yield-to-maturity) của
trái phiếu
BT7:
What is the return on a 5 percent
coupon bond that initially sells for
$1,000 and sells for $900 next year?
(=> -5%)

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 96

 Dạng bài tập tổng hợp về Trái phiếu
BT1:
a) Find the price of a 10% coupon bond with a face
value of $1,000, a 12% yield to
maturity, and 8 years to maturity. (PV = 900.65$)
b) Find the price of a 10% coupon bond with a face
value of $1,000, a 9% yield to
maturity, and 8 years to maturity. (PV = 1,055.35$)
c) Find the price of a 10% coupon bond with a face
value of $1,000, a 10% yield to
maturity, and 8 years to maturity. (PV = 1,000$)
Give a conclusion about the relation between price of
coupon bond and yield to maturity.
1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 97
 Dạng bài tập tổng hợp về Trái phiếu

BT1:
Đáp án câu c/
The price of a coupon bond and the yield to
maturity are negatively related.
The yield to maturity is greater than the coupon rate
when the bond price is below its face value.

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 Dạng bài tập tổng hợp về Trái phiếu
BT2:
Given a 7.5% coupon bond with a face value of
$1000, 5 years to maturity.
a. Calculate the price of bond if yield to maturity
changes in 3 cases: (1) 6%; (2) 10% and (3) 7.5%.
b. Give a conclusion about the relation between price
of coupon bond and yield to maturity.

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 99

 Dạng bài tập tổng hợp về Trái phiếu
BT2:
Given a 7.5% coupon bond with a face value of
$1000, 5 years to maturity.
a.
(1) PV = 1,063.18 $;
(2) PV = 905.23 $;
(3) PV = 1,000$
b.
The yield to maturity is greater than the coupon rate
when the bond price is below its face value.
The price of a coupon bond and the yield to maturity
are negatively related.
1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 100
 Dạng bài tập tổng hợp về Trái phiếu
BT3:
In February 2012 you purchase a three-year U.S.
government bond. The bond has an annual coupon
rate of 11.25%, paid semiannually. If investors
demand a 0.085% semiannual return (r/2 = 0.085%),
what is the price of the bond?

Lưu ý: Nếu đề bài ko cho Face value thì mặc định

Face value của trái phiếu Mỹ là 1,000$.

=> PV = 1,331.41 $

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 Dạng bài tập tổng hợp về Trái phiếu
BT4:
In February 2009, you purchase a 3-year US
Government bond. The bond has an annual coupon
rate of 4.875%, paid semi-annually. If investors
demand a 3% semiannual return, what is the price of
the bond?

=> PV = 969.53 $

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 Dạng bài tập tổng hợp về Trái phiếu
BT5:
A three-year bond has 8.0% coupon rate and face
value of $1000. If the yield to maturity on the bond is
10%, calculate the price of the bond assuming that
the bond makes semi-annual coupon interest
payments.

=> PV = 949.24 $

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 103

 Dạng bài tập tổng hợp về Trái phiếu
BT6:
In July 2010, you purchase 200 Yen of bonds in Japan
which pay a 8% coupon rate every year. If the bond
matures in 2015 and the YTM is 4.5%, what is the
value of the bond?

=> PV = 872.69 $

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 Dạng bài tập tổng hợp về Trái phiếu
BT7:
a. Calculate the rate of return of a $1,000 face value
coupon bond with a coupon rate of 10% that is bought
for $1,000, held for one year, and then sold for $
1,150; duration of this coupon bond is 5 years.

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 105

 Dạng bài tập tổng hợp về Trái phiếu
BT7:
a. Calculate the rate of return of a $1,000 face value
coupon bond with a coupon rate of 10% that is bought
for $1,000, held for one year, and then sold for $
1,150; duration of this coupon bond is 5 years.

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 106

 Dạng bài tập tổng hợp về Trái phiếu
BT7:
b. Calculate the rate of return of a $ 1,000 face value
coupon bond with a coupon rate of 10% that is bought
for $ 1,000, held for one year, and then sold for $ 950;
duration of this coupon is 5 years.

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 Dạng bài tập tổng hợp về Trái phiếu
BT7:
b. Calculate the rate of return of a $ 1,000 face value
coupon bond with a coupon rate of 10% that is bought
for $ 1,000, held for one year, and then sold for $ 950;
duration of this coupon is 5 years.

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 108

 Dạng bài tập tổng hợp về Trái phiếu
BT8:
a. Calculate the rate of return of a $ 1,000 face value
coupon bond with a coupon rate of 10% that is
bought for $ 1,000, held for one year, and then
sold for $ 800, duration of this coupon is 5 years.
(r = -10%)
b. Calculate the rate of return of a $1,000 face value
coupon bond with a coupon rate of 10% that is
bought for $1,000, held for one year, and then sold
for $ 1,105, duration of this coupon bond is 5
years. (r = 20.5%)

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 109

 Ton Duc Thang University
Finance and Banking Faculty
Corporate Finance Department

Thank you for your attention

I wish you all the best!

Dr. Ngô Nguyễn Quỳnh Như

1/27/2024 B02084 – Chapter 3: Understanding interest rate Page 110