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CFA Level 1
Fixed Income

Calculating the Price of a Bond Using DCF

Easy Fixed Income Valuation Discounted Cash Flow

John is considering purchasing a bond that has a face value of $1,000, pays a coupon of 6% annually, and matures in 10 years. The market interest rate for similar bonds is currently 5%. To assess whether the bond is priced appropriately, John wants to calculate the present value of its cash flows.

What is the approximate current price of the bond, based on the discounted cash flow method?

Hint

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