A bond with a nominal of EUR 400 000 000 and a maturity of 2 years has a coupon of 4.24%. The price of the bond is 96.5%. What is the coupon expressed in money (euro) in the second year? Calculate the yield of the bond (or write down the equation with all number filled in). Can you use this yield to calculate the current value (PV) of the coupon in year 2? Explain your answer.

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.