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zhannawk [14.2K]
3 years ago
9

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?

Business
1 answer:
cestrela7 [59]3 years ago
8 0

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

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