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A bond has a coupon of 5.0%, and is trading for 102.37, at a YTM of 4.7%. How many years until the bond matures?

A bond has a coupon of 5.0%, and is trading for 102.37, at a YTM of 4.7%. How many years until the bond matures?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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**Bond Maturity Calculation Example** A bond has a coupon rate of 5.0% and is currently trading at a price of 102.37. The bond's Yield to Maturity (YTM) is 4.7%. **Question:** How many years until the bond matures? **Explanation:** To determine how many years are left until the bond matures, you would typically use a financial calculator or software that can solve for the number of periods in the bond's cash flow schedule, given the coupon rate, price, and Yield to Maturity. This involves solving the present value equation for bonds, where bond price is the present value of the future cash flows, which include the annual coupon payments and the face value at maturity.
Transcribed Image Text:**Bond Maturity Calculation Example** A bond has a coupon rate of 5.0% and is currently trading at a price of 102.37. The bond's Yield to Maturity (YTM) is 4.7%. **Question:** How many years until the bond matures? **Explanation:** To determine how many years are left until the bond matures, you would typically use a financial calculator or software that can solve for the number of periods in the bond's cash flow schedule, given the coupon rate, price, and Yield to Maturity. This involves solving the present value equation for bonds, where bond price is the present value of the future cash flows, which include the annual coupon payments and the face value at maturity.
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Bonds are the liabilities of the company which is issued to raise the funds required to finance the capital requirement of the company. The company needs to pay interest expenses against the bonds financing. 

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