Question
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 25 years to maturity, and a coupon rate of 7.1 percent paid annually. |
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If the yield to maturity is 8.2 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Homework Answers
Answer #1
Par Value of Bond= €1,000
Annual Coupon Payment = €1,000*7.1%
=€71
No of years to maturity (n) = 25 years
Yield to Maturity (YTM) = 8.2%
Calculating the Price of Bond:-
Price = 745.14 + 139.42
So, Current Price of the Bond= €884.56
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