Final answer:
To calculate the value of a coupon bond, use the present value formula with the coupon payment, discount rate, number of periods, and face value. Plug in the values and calculate to find the bond's value.
Step-by-step explanation:
To calculate the value of a coupon bond, we need to calculate the present value of the future cash flows. In this case, the bond has a face value of BD1,000 and provides a 9% annual coupon for 15 years. The appropriate discount rate is 10%. We can use the following formula to calculate the present value:
PV = C * (1 - (1 + r)^-n) / r + F / (1 + r)^n
Where PV is the present value, C is the coupon payment, r is the discount rate, n is the number of periods, and F is the face value.
Plugging in the values, we get:
PV = (BD1,000 * 0.09 * (1 - (1 + 0.1)^-15) / 0.1) + (BD1,000 / (1 + 0.1)^15)
Calculating this equation will give us the value of the coupon bond.