Question

even the most corporate bonds in the United States make coupon payment semi annually, bonds issued elsewhere often have annual coupon payments. Suppose a German company Issues a bond with a par value of $1000, 15 years to maturity, and a coupon rate of 7.3% paid annually. If the yield to maturity is 8.4%, what is the current price of the bond?

Answer 1

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =15

Bond Price =∑ [(7.3*1000/100)/(1 + 8.4/100)^k]     +   1000/(1 + 8.4/100)^15

k=1

Bond Price = 908.1