Question

# Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

 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.
 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.)

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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