Question

20) - 20) Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $742. The yield to maturity is 13.2 percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature? A) 7.41 years B) 8.32 years C) 4.19 years D) 5.73 years E) 6.16 years

Answer 1

20) D. 5.73 years

19) B. $975.93

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

. A B C D E 1 220) Face value Coupon rate 1000 6.50% 13.20% YTM Current market price 742 Years until maturity 5.73 years 00 19) 9 10 11 12 13 Face value Coupon rate YTM Years until maturity 1000 6.50% 6.94% Current market price $975.93

Cell reference -

2 А в 2 20) 3 Face value 1000 Coupon rate 0.065 YTM 0.132 Current market price 742 Years until maturity =NPER(C4,-C3*C2,C5,-C2,0) years 10 19) 11 12 13 Face value Coupon rate YTM Years until maturity 1000 0.065 0.0694 7 Current market price =PV(C12/2, C13*2,-C11/2*c10,-C10,0)

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.