Unit 11
Bonds and Sinking Funds

In this unit you will be extending the applications of the principles of compound interest and annuities that you worked with in Unit 9. This unit provides the basis for your exploration of the world of finance, especially in two main areas of finance bonds and sinking funds.

Objectives

After completing this unit, you should be able to perform the following tasks.

1. Calculate the market price of a bond.
2. Calculate the yield rate on a bond, and bond price quotations.
3. Explain the concept of sinking funds and how they are used for debt retirement, and solve problems involving sinking fund principles.