Full price computation

In order to value a bond with the settlement date between coupon payments, we must answer three questions. First, how many days are there until the next coupon payment date From Chapter 1, we know the answer depends on the day count convention for the bond being valued. Second, how should we compute the present value of the cash flows received over the fractional period Third, how much must the buyer compensate the seller for the coupon earned over the fractional period This is accrued interest that we computed in Chapter 1. In the next two sections, we will answer these three questions in order to determine the full price and the clean price of a coupon bond. 

Once we know the full price and the accrued interest, we can determine the clean price. The clean price is the price that quoted in the market and represents the bond s value to the new bondholder. The clean price is computed as follows... 

To illustrate the computation, let s examine a 4.2% coupon, lO-year Spanish government security that matures on July 30, 2013. Bloomberg s Yield Analysis Screen is presented in Exhibit 4.7. If the bond is priced to yield 3.724% on a settlement date of June 6, 2003, we can compute the PVBP by using the prices for either the yield at 3.734 or 3.714. The bond s initial full price at 3.724% is 104.5673. If the yield is decreased by 1 basis point to 3.714%, the PVBP is 0.085 (1104.5673 - 104.65221). Note that our PVBP calculation agrees with Bloomberg s calculation labeled PRICE VALUE OF A 0.01 that is presented in the Sensitivity Analysis box located in the lower left-hand corner of the screen. 

Any asset that loses value over time is perishable. Clearly, fruits, vegetables, and pharmaceuticals are perishable, but this list also includes products such as computers and cell phones that lose value as new models are introduced. High-fashion apparel is perishable because it cannot be sold at full price once the season is past. Perishable assets also include all forms of production, transportation, and storage capacity that is wasted if not fully utilized. Unused capacity fiom the past has no value. Thus, all unused capacity is equivalent to perished capacity. 

Methods of type (1) are to be used when the fundamental physical origin of phenomena, such as potential barriers or the emomeric effect for example, are the object of study. Lengthy calculations are the price one has to pay for quantitative accuracy. At present, prohibitive amounts of computer time would be needed if one wanted to do an accurate ab-initio study of the conformations of a sizeable organic molecule, even if the precise molecular geometry is known. Still, one may hope that ab-initio calculations with full relaxation of internal coordinates, carried out on a selected series... 

The problem with me-too drugs is not that they are sometimes imitative or of modest therapeutic benefit. Imitation is an important dimension of competition, and the more choices consumers have, the more intense will be the competition. The personal computer industry provides a clear illustration of how rapid improvements in quality can coincide with steep price reductions (46). The problem with me-too drugs is that a large part of the market in the United States is very insensitive to price and does not get the full benefits of price competition that would be expected from the availability of an array of similar products. 

We will discuss two approaches for assessing the interest rate risk exposure of a bond or a portfolio. The first approach is the full valuation approach that involves selecting possible interest rate scenarios for how interest rates and yield spreads may change and revaluing the bond position. The second approach entails the computation of measures that approximate how a bond s price or the portfolio s value will change when interest rates change. The most commonly used measures are duration and convexity. We will discuss duration/convexity measures for bonds and bond portfolios. Finally, we discuss measures of yield curve risk. 

Thus, the price of relying on conventional discrete representations is that the more fundamental, underlying, representational formalism remained in the dark, which, in turn, prevented the development of a scientifically much more satisfactory and definitive framework for computation, including the realization of the full potential of many interesting ideas such as, to take a recent example, the membrane computing. 

The schemes of how to connect pulse oximeter with computer are certainly many. One possibility is to buy new pulse oximeter with full support of communication with computer. But except this possibility the new pulse oximeter doesn t bring so much function improvement, therefore it isn t of advantage to buy new pulse oximeter with regard to price. Cheaper and more effective is creating of own interconnection of present oximeter with computer. Next it was taken into consideration as lowest purchase price of necessary parts for realization of communication interconnection as possible. But the most important factor was speed and quality of data transfer. 

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