Security Code 6 - Monroe 3180 User Manual

SECURITY CODE 6

Security Code 6 calculates stepped coupon bonds, as well as any security which has two coupon periods,
wach with it's own coupon rate, and pays periodic interest on a 30/360 (30 day month/360 day year)
calendar. Typical examples of stepped coupon instruments are: Growth and Income Securities and
Capital Appreciation/Future Income Securities. These instruments function essentially as zero coupon
securities for a period of time afte rissuance, then on a conversion date they begin to pay coupon interest
semi-annually. The TRADER II can compute the price and yield of any security which contains two
interest rate periods (Stepped coupons). The first coupon rate does not have to zero. For example, for
the first 15 years, a security may have a coupon of 4.5% and then for the next 10 years a coupon of
9.5%.
Enter the security just as in Code 0 with the additional entries of CONV DATE and CONV RATE. The
conversion date must be a normal coupon date and is the date at which the conversion coupon rate takes
effect.
EXAMPLE: A Capital Appreciation Bond maturing on November 1, 2010, pays no coupon until
November 1, 2000, and then pays 9% semi-annually until maturity is sold to yield 8.75%. the cond is
bought for settlement on June 24, 1987. Find the dollar price.
ENTER
6
6.2487
Set the FED/MUNI switch and status line as follows:
FED/MUNI SWITCH to FED
ENTER
0
11.0110
9
11.0100
8.75
32
PRESS RESULTS DISPLAYED
CODE Security Code 6.
SETTLEMENT Settlement Date Wed. 06-24-1987
DATE
C=6 STEP 30/360 SEMI 06-24-87 MATURITY
PRESS RESULTS DISPLAYED
COUPON Coupon Rate 0.000%
MAT Maturity Date Mon.
DATE
END
CONV Conv. Rate 9.000%
COUPON
CONV Conv. Date Wed.
DATE
TO Price 32.392 (M)
PRICE
MONROE TRADER II
11-01-2000
11-01-2000