A 10-year German government bond (bund) has a face value of €100 and a coupon rate of 5% paid annually. Assume that the interest
rate (in euros) is equal to 6% per year. What is the bond’s PV?
1 answer:
Answer:
€92.64
Explanation:
The present value i.e PV formula is used that is shown in the attached spreadsheet
The NPER reflects the time period.
Given that,
Future value = €100
Rate of interest = 6%
NPER = 10 years
PMT = €100 × 5% = €5
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the answer would be €92.64
You might be interested in