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Activity Overview |
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In this activity, students will deal with Bonds, that are long-term promissory notes, specifying that the creditor will receive regular interest payments for the term of the agreement and then receive the face amount of the bond. Students will have to estimate the market value of bonds and explore bond values versus current market interest rates.
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Before the Activity |
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Select TVM Solver from the calculator menu
See the attached PDF file for detailed instructions for this activity
Print pages 42 - 45 from the attached PDF file for your class
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During the Activity |
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Distribute the pages to the class.
Follow the Activity procedures:
Calculate the market value of a bond, which is the present value (PV), using the number of periods, interest rate, monthly payments, and future value
If the current market interest rate is equal to coupon rate, then the market value of the bond equals its face amount
If the current market interest rates are higher, the bond's market value is lower and it is selling at a discount
If the current market interest rates are lower, the bond's market value is higher and it is selling at a premium
Calculate the present value of bonds at a given interest rate
Plot a graph of interest rate versus the present value of the bond
Prepare a table displaying the present value of the bond at various interest rates
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After the Activity |
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Review student results:
As a class, discuss questions that appeared to be more challenging
Re-teach concepts as necessary
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Other Downloads |
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view standards alignment
view textbook alignment
Subject Area:
Math : Math General : General
Author:
Texas Instruments
Level:
9-12
Activity Time:
60 Minutes
Device:
TI-83 Plus Family, TI-84 Plus Family
Apps:
Finance
Software:
Accessories:
Other:
This is Activity 14 from the EXPLORATIONS Book:
Time, Value, Money: Applications on the TI-83.
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