Question

PQR Co. has semiannual-pay 6.28 percent coupon bonds with a YTM of 5.33 percent. The current yield on these bonds is 5.66 percent. How many years do these bonds have left until they mature?

Answer 1

price = coupon/current yield*par value = 6.28/5.66*1000 = 1109.54

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =Nx2

1109.54 =∑ [(6.28*1000/200)/(1 + 5.33/200)^k]     +   1000/(1 + 5.33/200)^Nx2

k=1

N(in years) = 18.13