What is the time to maturity of a 6.0% coupon bond if its YTM is 9.0%?...

What is the time to maturity of a 6.0% coupon bond if its YTM is 9.0%? The bond's price is $766.42 and coupons are paid annually.

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Expert Solution

At 14 years time to maturity bond price is equal to given price.

Particulars	Cash flow	Discount factor	Discounted cash flow
present value Interest payments-Annuity (9%,14 periods)	$ 60.00	7.78615	$ 467.17
Present value of bond face amount -Present value (9%,14 periods)	$ 1,000.00	0.29925	$ 299.25

Bond price			$ 766.42
Face value			$ 1,000.00
Premium/(Discount)			$ (233.58)

Answer is 14 years.

jeff jeffy answered 1 year ago

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