Callable Bonds | Exam FM | Financial Mathematics Lesson 24 - JK Math

How To Calculate the Price of Callable Bonds (Financial Mathematics Lesson 24)

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In this lesson we learn about callable bonds and how to calculate their price. Callable bonds are bonds that have a range of possible redemption dates. As such, there are particular dates where the price of the bond would be more desirable compared to other dates. This is all based on the coupon rate and yield rate of the bond. We discuss how to determine when to calculate the price of a callable bond based on these rates and go through the calculations step by step.

This course is designed to help students understand the concepts of mathematics of investment and credit, as well as provide a starting point in preparation for the Actuarial Exam FM (Financial Mathematics).

Financial Mathematics requires a proficient understanding of Calculus concepts such as derivative and integration techniques. This implies that a solid understanding in various algebra skills, including manipulating equations, basic factoring methods, solving logarithmic equations, and more, are also required to fully comprehend and learn the concepts of the Financial Mathematics course.

Video Chapters:
0:00 What is a Callable Bond?
2:03 Example Setup / Bond Components
5:59 Price of a Premium Callable Bond
10:16 Price of a Discount Callable Bond
13:40 Price of a Par Value Callable Bond


📝 Examples Video:    • Price of Callable Bonds Examples | Exam FM...  

⏩ Unit 3 Review:    • Loan Repayment & Bond Valuation Unit Revie...  

⏩ Next Lesson:    • Internal Rate of Return | Exam FM | Financ...  

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