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cupoosta [38]
3 years ago
6

A European band has a par value of 1600 Euros a coupon rate of 4 5 percent and a yield to maturity of 3 2 percent . The bond has

19 years to maturity . Coupons are made annually . What is the value of the bond ?
Mathematics
1 answer:
Svetradugi [14.3K]3 years ago
3 0

Answer:

Bond Price​= 1,892.73

Step-by-step explanation:

Giving the following information:

Par value= 1,600

Cuopon= 1,600*0.045= 72

YTM= 3.2%

Number of years (n)= 19

<u>To calculate the price of the bond, we need to use the following formula:</u>

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 72*{[1 - (1.032^-19)] / 0.032} + [1,600 / (1.032^19)]

Bond Price​= 1,013.29 + 879.44

Bond Price​= 1,892.73

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