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Homework answers / question archive / Find the current price of a 3-year coupon bond which has a face value of 1000 TL, 5% coupon payment and 6% yield to maturity?

Find the current price of a 3-year coupon bond which has a face value of 1000 TL, 5% coupon payment and 6% yield to maturity?

Economics

Find the current price of a 3-year coupon bond which has a face value of 1000 TL, 5% coupon payment and 6% yield to maturity?

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Answer:

Bond Price = C * (1- (1 +r)^-n/r) + F/(1 + r)^n

Where,

C = Coupon payment

r = YTM

F = Face value

n = Time perion

Coupon = 1000*5% = 50

Bond price = 50 * (1- (1 +6%)^-3/6%) + 1000/(1 + 6%)^3

= 50 * (1- (1.06)^-3/0.06) + 1000/(1.06)^3

= 50* (1-0.83)/0.06+ 1000/1.1910

= 50*2.673 + 839.61 = 133 + 839.61 = 973

Bond price = 973

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