Even though most corporate bonds in the United States make c

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

Solution

Hi,

Please find the detailed answer as follows:

Nper =25 (indicates the period)

PV = ? (indicates the price)

FV = 1000 (indicates the face value)

Rate = 2.5% (indicates semi-annual YTM)

PMT = 1000*7.40% = 74 (indicates the amount of interest payment)

Current Price = PV(Rate,Nper,PMT,FV) = PV(2.5%,25,74,1000) = 1902.79

Thanks.