Answered

Get the answers you need at Westonci.ca, where our expert community is always ready to help with accurate information. Explore thousands of questions and answers from a knowledgeable community of experts on our user-friendly platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

A European bond has a par value of 1000 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?

Sagot :

facundobuzzetti

Answer:

Bond Price​= 1,182.96

Step-by-step explanation:

Giving the following information:

Par value= 1,000

Cuopon= 1,000*0.045= 45

YTM= 3.2%

Number of years (n)= 10

To calculate the price of the bond, we need to use the following formula:

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

Bond Price​= 45*{[1 - (1.032^-19)] / 0.032} + [1,000 / (1.032^19)]

Bond Price​= 633.31 + 549.65

Bond Price​= 1,182.96

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.