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Lesson Plan

The lesson plan aims to teach students how to value fixed income instruments by calculating bond prices given discount rates, identifying relationships between bond characteristics and prices, and defining terms like spot rates, yields, and matrix pricing. Students will learn through a PowerPoint presentation and textbook, with an evaluation consisting of a 10 question quiz and 5 question activity on Google Forms to calculate bond prices and identify if they are at a discount, premium, or par.

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Pearl Morni Albano
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123 views4 pages

Lesson Plan

The lesson plan aims to teach students how to value fixed income instruments by calculating bond prices given discount rates, identifying relationships between bond characteristics and prices, and defining terms like spot rates, yields, and matrix pricing. Students will learn through a PowerPoint presentation and textbook, with an evaluation consisting of a 10 question quiz and 5 question activity on Google Forms to calculate bond prices and identify if they are at a discount, premium, or par.

Uploaded by

Pearl Morni Albano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Lesson Plan

I. OBJECTIVES At the end of the lesson, learners should be able to:

 calculate a bond’s price given a market discount rate;


 identify the relationships among a bond’s price, coupon rate,
maturity, and market discount rate (yield-to-maturity);
 define spot rates and calculate the price of a bond using spot
rates;
 describe and calculate the flat price, accrued interest, and the
full price of a bond;
 describe matrix pricing;
 calculate the annual yield on a bond for varying compounding
periods in a year; and
 calculate and interpret yield measures for fixed-rate bonds
II. SUBJECTJECT A. Topic: Valuation of Fixed Income Instruments (part 1)
MATTER B. Materials: Powerpoint presentation
C. Reference: Fixed Income Analysis textbook 4th edition by
Adams and Smith
D. Value infused: Awareness, Interaction, and Understanding

III. LESSON SECTION 1: Introduction to Fixed Income Valuation


CONTENT SECTION 2: Bond Prices and the Time Value of Money
 Bond pricing with a market discount rate
 Yield-to-maturity
 Relationships between the bond price and bond characteristics
 Pricing bond with spot rates
SECTION 3: PRICES AND YIELDS: CONVENTIONS FOR QUOTES
AND
CALCULATIONS
 Flat Price, Accrued Interest, and the Full Price
 Matrix Pricing
 Annual Yields for Varying Compounding Periods in the Year
 Yield Measures for Fixed-Rate Bonds
IV. TEACHING o Greetings and Introducing the student teachers name and topic
PROCEDURES/ o Checking of the attendance
STRATEGY o Evaluation
 The Student teacher will give a quiz and activity using a
Google forms.
 The quiz is only 10 items consisting of 8 multiple choice
and 2 true/false. The activity is 5 items—where the
learners will choose the correct answer to the problem
and attached their solution using the Google forms.
Questions of the quiz:

When the coupon rate is greater than the market discount rate, the
bond is priced at a?
*
A.) Par Valu

B.) Discount

C.) Premium

D.) Book Va

When the coupon rate is equal to the market discount rate, the bond
is priced at?
*
A.) Par Valu

B.) Discount

C.) Premium

D.) Book Va

Assuming, a five-year bond pays a 7% annual coupon and the market


discount rate is 10%, the bond would trade at?
*
A.) Par Valu

B.) Discount

C.) Premium

D.) Book Va

It is the internal rate of return on the cash flows.


*
A.) Market D

B.) Debt Rat

C.) Receivab

D.) Yield-to-

It is an estimation process to find the market price of a not-so


frequently traded bond based on the prices of comparable bonds with
similar times to maturity, type of issuer, coupon rates, and credit
quality.
*
A.) Matrix pr

B.) Pricing b

C.) Bond pri

D.) Discount

It is the number of compounding periods in a year, or number of


coupon payments made in a year.
*
Periodicity

Perpetual
Periodic

Semi-annua

It is the yield to maturity using a 30/360 day convention assuming


payments are made on scheduled dates, even if the payment fell on a
weekend or a holiday.
*
Yield-to-Mat

Current Yiel

Yield-to-call

Street Conv

This yield to maturity which is calculated using the actual day count
convention is called True yield.
*
False

True

Coupon rate which is greater than the market discount rate is called a
Discount Bond
*
False

True

 
Coupon rate that is equal to its market discount rate is called a Par
bond.
*
True

False

Activity:

Assuming a coupon rate on a bond is 10% and the payment is made


once a year. The time to maturity is 3 years and the market discount
rate is 7%. Compute for the bond price per 200 of par value using the
formula provided below.
*

246.715 or 2

215.746 or 2

247.615 or 2

251.746 or 2

 
Write your solution in a clean sheet of paper  for the question above.
And upload in the form below.
Also, indicate whether the bond is trading at discount, premium or par.

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