Fixed Income - Total Return...

Urgh… this seems so pointless (LOS 23.e)… I thought we were done with long winded calculations at level 2???

On a scale of 1 to 10 how important does anyone think this topic is?

What calculations are you talking about specifically?

BEY yield on a bond but calculation involves the principal component, then the coupon THEN everying thing is added and de-semi annualised…

So many sources of calculator keystroke errors and also after all that you could still get it wrong if you calculate say an EAR instead of a BEY…

Edit: Deleting double post

This shit is cake, how’d u get to l3?

Pretty easy. Calculate the bond value as of the horizon date (PV calc). Calculate the coupon payments (FV) to the horizon date using the reinvestment rate as the I/Y. Sum both and enter as FV, calculate I/Y and double if BEY required and semi-annual payments (which seems the most common).

If this seems weird, then just ignore it - it’s not worth learning at this point.