Answer:
Follow these steps:
step 1 - Determine the Bond's Interest Payments.
Step 2 - Determine the present value of the bond.
step 3 - Ascertain the interest rates' present value.
step 4 - Establish the Bond Price.
Explanation:
Calculating the present value of anticipated future cash flows, which include coupon payments and the par value, or the amount that will be redeemed when the bond matures, is the basis for bond pricing. The yield to maturity refers to the interest rate used to discount future cash flows (YTM.)
Bond price is equal to i=1n C/(1+r)n + F/(1+r)n
or
Bond Price = F/(1+r)n + C* (1-(1+r)-n/r)
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