Calculate the price of the Bond? (98th)

 

Calculate the price of the Bond? Or compute the price of a 10% coupon bond with 12 years of maturity and par value of TK. 100,000.00 if the required yield is 12% .

When No. of years = 12 years

We know that

Given YTM=12%  so r = .12 coupon rate = 10%=.10 no of periods n = 12 years

FV par value = 100000.00 So c= 100000*.10 = 10000.00

=C×(1-(1+r)^(-n))/r+FV/(1+r)^n

pv=10000×(1-(1+.12)^(-12))/(.12)+ 100000/(1+.12)^12

=61944.1642+25667.35

=87611.5142

So the price of the bond is TK. 87611.5142

 

 pv=C×(1-(1+r)^(-n))/r+FV/(1+r)

PV= Present Value (Bond Price)

C = Periodic coupon payment

                                                           = Coupon rate * FV/ No of coupon payments in a year

FV= Face/Par value of the bond

r = Yield to maturity (YTM)

n= No of periods till maturity