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How to Calculate Bond Price.
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How to Calculate Bond Price.

Rosemary Njeri

Bond Price is what investors are willing to pay for an existing bond or the amount one pays to buy a bond.

It is usually represented as a percentage of par value.

Formula to calculate bond price.

Calculate Bond Price.
  • C = Periodic coupon payment,
  • F = Face / Par value of bond,
  • r = Yield to maturity (YTM) and
  • n = No. of periods till maturity

Example:

If a company has issued a bond having a face value of $150,000 carrying an annual coupon of $5,000 and maturing in 10 years. The prevailing market rate of interest is 10%. Calculate the bond price.

Calculate Bond Price.

Therefore, the bond price is $ 457,250.

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