Mastering Python for Finance - Second Edition

Calculating the price of a bond

When the YTM is known, we can get back the bond price in the same way we used the pricing equation. This is implemented by the bond_price() function:

In [ ]:    def bond_price(par, T, ytm, coup, freq=2):        freq = float(freq)        periods = T*2        coupon = coup/100.*par        dt = [(i+1)/freq for i in range(int(periods))]        price = sum([coupon/freq/(1+ytm/freq)**(freq*t) for t in dt]) + \            par/(1+ytm/freq)**(freq*T)        return price

Plugging in the same values from the earlier example, we get the following result:

In [ ]:    price = bond_price(100, 1.5, ytm, 5.75, 2)    print(price)Out[ ]:       95.04279999999997

This gives us the same original bond price discussed in the earlier example, Calculating the yield to maturity. With the bond_ytm()