Hi, In reading 39 page 492, box 3. There is a table with the calculated value of Westvaco bond. How are these numbers calculated? The data presented: Oct 31 1998: yield on US 8.75% bond : 5.4% assumed spread: 1.3% (since the company’s S&P rating is A-) Assumed yield on Westvaco 9.75% bond: 6.7% Calculated value of Westvaco bond: $1344.85 (this is the value I do not know how to calculate) Bloomberg value: $1369.8 The bond was issued at 1990 at 9.75% due June 15, 2020 Thanks very much. Let me know if I need to provide more info.
Discount all the remaining cash flows, including the face value to be returned at maturity, using the given YTM for the discount rate. The semi-annual cash flows are the face value multiplied by half the coupon rate. You’ll have about 40 payments of 4.875% x $1,000 = $48.75.
All I can guess is that 1345 is the clean price of the bond. If I calculate the value immediately after the 6/15/98 coupon, n=42 i=3.35% fv=1000 pmt=48.75 …for a pv of 1341.15, which is the only number I can get near 1345. This is the bond’s clean price for the following period. By Oct 31 you’ve accumulated $36.56 in interest. If I calculate dirty price 4.5 months into the current period I get 1374, not the 1370 you see on Bbg. So I’m a bit confused – hardly the first time. 
use n=43, and you get exactly 1344.85