Page 49 - FINAL CFA SLIDES DECEMBER 2018 DAY 14

LOS 52.b: Identify the relationships among a Session Unit 14:
bond’s price, coupon rate, maturity, and

market discount rate (yield-to-maturity). p.38 52. Introduction To Fixed Income Valuation

Relationship Between Price and Maturity
Prior to maturity, a bond can be selling at a significant discount or premium to par value. However, regardless of
its required yield, the price will converge to par value as maturity approaches. Consider a bond with $1,000 par

value and a 3-year life paying 6% semi-annual coupons. The bond values corresponding to required yields of 3%,
6%, and 12% as the bond approaches maturity:

tanties