Calculate the price of a bond. Show your calculations
Company ROOS is partly financed with a bond loan. The bonds are so-called 'level coupon bonds'. The nominal value of each of the bonds is €1.000 and the coupon 3%. The coupon is paid annually. The remaining maturity of the bonds is 4 years. The yield to maturity of the bonds is 6%. Assume there is no default risk.
a. Calculate the price of a bond. Show your calculations. (6 points)
b. At what market interest rate does the price of the bond equal the nominal value? (4 points)