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%
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
If you need any clarification, you can ask in comments.
If you like my answer, then please up-vote as it will be motivating
Get Answers For Free
Most questions answered within 1 hours.