Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

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, 6 years to maturity, and a coupon rate of 6 percent paid annuallly. If the yield to maturity is 10 percent, what is the current price of the bond?

rev: 02_28_2019_QC_CS-161195

Multiple Choice

$784.50
€1,200.69
€867.08
€825.79
€1,030.00

Expert Solution

Solution :

The current price of the bond is = € 825.79

Thus the solution is Option 4 = € 825.79

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago

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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

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