Kiakaha

Hi steph,

You shouldn't worry about calculating the value of the bond at this point - there will be an upcoming reading that will tell you how to do so exactly. The point of this example is to show you the difference in portfolio value if parallel shifts happens versus nonparallet shift (i.e. illustrate yield curve)

Nevertheless, if you are so excited to know how to do the calculations from now and find the value (which is a good thing), then here is how it goes:

N = 2 (true)
I/Y = 5.25 (not 0.25 because you input the yeild NOT the increase in the yield)
PMT = not zero of course! it is CR * Par value (5% * 100) = 5
FV = 100
CPT PV = 99.5312

and then you know how to find the value for par of $5,000,000

Omar