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even though most corporate bonds in the united states make coupon payments semiannually bonds issued elsewhere often have annual coupon payment . suppose a german company issue a bond with part value of 1000 23 year to maturity and a coupon rate of 5.8 percent paid annually if the yield to maturity is 4.7 what is current price of the bond in euro?

Respuesta :

Answer:

€1,152.66

Explanation:

In order to determine the current price of the bond we need to apply the present value formula i.e to be shown in the attachment below:

Given that,  

Future value = $1,000

Rate of interest = 4.7%

NPER = 23 years

PMT = $1,000 × 5.8% = $58

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

After applying the above formula, the current price of the bond is €1,152.66

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