A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%.

A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%. If the current price is 85.618% of PAR, what must be the tenor, in years?2. (5 pts) A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%. If the current price is 85.618% of PAR, what must be the tenor, in years?

Expert Solution

use NPER function in EXCEL to find the tenure (number of years)

=NPER(rate,pmt,pv,fv,type)

Please remeber that the payments are semi-annual

rate=yield to maturity/2=8%/2=4%

pmt=semi-annual coupon=(coupon rate*face value)/2=(5%*1000)/2=50/2=25

pv=85.618%*1000=856.18

fv=1000

=NPER(4%,25,-856.18,1000,0)=12.33 years

The remaining tenure=12.33 years

jeff jeffy answered 2 years ago

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