Question: Use VBA to solve Create a user-defined function to solve for a bond's price using a FOR loop to discount cash flows. The price (PV)
Create a user-defined function to solve for a bond's price using a FOR loop to discount cash flows. The price (PV) of a bond is the present value of all of its future cash flows. We can use a FOR loop to discount all coupon payments: . We can use the following formula: xCRxPar XCRX Par Par PV bond + + ... + XCRX Par + (1+y/m) (1 + y/m) (1 + y/m) (1 + y/m) Where: CR denotes the coupon rate (annual rate) y denotes the bond's yield T denotes the number of years to the bond's maturity date (i.e., redemption) Par denotes the par value (face value) of the bond m denotes the coupon payment frequency . Hints: To discount the coupon payments, your For loop should be an accumulation of: (1/m x Par x CR) X (1+y/m) - Where t is the iteration number. Later, you can add the discounted par (face) value to your accumulation of discounted coupon payments. aid semi-annually
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