Question

Company B had issued 10-year bonds a year ago at the coupon rate 10%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 5%. The face value of the bond is €1000.

Calculate the current bond price.

Answer 1

	Face Value of Bond = Euros 1000
	Years to maturity = 9 years
	Yield to Maturity = 5%
	Coupon rate = 10%
	Coupon amount = 1000*10% = Euros 100
Year	Coupon	Redemption	Total Cash flows	Discount Factor @5%	Discounted Values
1	100	0	100	0.952	95.238
2	100	0	100	0.907	90.703
3	100	0	100	0.864	86.384
4	100	0	100	0.823	82.270
5	100	0	100	0.784	78.353
6	100	0	100	0.746	74.622
7	100	0	100	0.711	71.068
8	100	0	100	0.677	67.684
9	100	1000	1100	0.645	709.070
				Price Of Bond	1355.39 (Euros)