Question

Daimler AG issued a new ten-year EUR bond with a 5.25% annual coupon which is trading at a yield of 4.78% two years after the issuance date. Calculate the price you would you expect to pay for this bond and whether it is trading at a premium or discount.

Answer 1

Assuming par value of 1000
Price=Coupon rate*Par value/yield*(1-1/(1+yield)^t)+Par value/(1+yield)^t=5.25%*1000/4.78%*(1-1/1.0478^8)+1000/1.0478^8=1030.649093