Question

Company B had issued 10-year bonds a year ago at the coupon rate 10%. The bond...

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.

Homework Answers

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)
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