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Old 11-11-2017, 11:28 AM
Leofwyen Leofwyen is offline
Join Date: Oct 2017
Posts: 7
Default Which bond formula to use?

Hi, im working through asm right now and im struggling a bit with bond pricing questions. When questions use the basic formula i usually get them right, but i almost never notice when i need to use the premium discount formula. I was hoping someone might have a for identifying which formula to use for a problem, or just generally when the premium discount formula would come in handy.
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Old 11-12-2017, 01:05 PM
xplicitator xplicitator is offline
Join Date: Sep 2014
College: SFU
Posts: 41

Generally when you're dealing with premiums or discounts of bonds, you would want to use the premium/discount formula (obviously). Another time to use the premium/discount formula is when you are dealing with callable bonds. At times, using the premium/discount formula can be more useful.
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