Even though most corporate bonds in the United States make coupon payments semia

Question

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7.0 percent paid annually.

If the yield to maturity is 8.1 percent, what is the current price of the bond? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7.0 percent paid annually.

Explanation / Answer

Face value (FV) €                                   1,000.00 Coupon rate 7.00% Number of compounding periods per year 1 Interest per period (PMT) €                                         70.00 Number of years to maturity 20 Number of compounding periods till maturity (NPER) 20 Market rate of return/Required rate of return 8.10% Market rate of return/Required rate of return per period (RATE) 8.10% Bond price PV(RATE,NPER,PMT,FV)*-1 Bond price €                                       892.80

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