Question
In: Finance
A premium annual-pay bond pays a $77 coupon, has a yield to maturity of 6%, and...
A premium annual-pay bond pays a $77 coupon, has a yield to maturity of 6%, and is priced at $1,198.7. How many years till the bond matures? Answer in years to at least two decimal places.
Solutions
Expert Solution
At aroud 20.74 years bond price is equal to given price.
| Particulars | Cash flow | Discount factor | Discounted cash flow |
| present value Interest payments-Annuity (6%,20.74 periods) | $ 77.00 | 11.68924 | $ 900.07 |
| Present value of bond face amount -Present value (6%,20.74 periods) | $ 1,000.00 | 0.29865 | $ 298.65 |
| Bond price | $ 1,198.72 | ||
| Face value | $ 1,000.00 | ||
| Premium/(Discount) | $ 198.72 |
Answer is 20.74 years
jeff jeffy answered 1 year agoRelated Solutions
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