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2). In April 2020 you purchase 100 euros of bonds in Greece which pay a 5%...

2). In April 2020 you purchase 100 euros of bonds in Greece which pay a 5% coupon every year. If the bond matures in 2025 (five years) and the YTM is 3.0%, what is the value of the bond?

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Answer #1
Period Discounting Factor
[1/(1.03^period)]		 Discounting Factor Annuity
(Sum of discounting factor & all previous discounting factors)
1 0.970873786 0.970873786
2 0.942595909 1.913469696
3 0.915141659 2.828611355
4 0.888487048 3.717098403
5 0.862608784 4.579707187

Value of Bond = PV of Maturity Amount + PV of All Coupons = [Maturity Value*Discounting Factor] + [Coupon*Annuity Factor] = [100*0.8626] + [100*5%*4.5797] = 86.26 + 22.8985 = $109.1585

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