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The Lo Sun Corporation offers a 6.2 percent bond with a current market price of $774.50. The yield to maturity is 8.46 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?
A. 22.43 years
B. 44.86 years
C. 24.98 years
D. 43.04 years
E. 11.22 years

Respuesta :

Answer:

A. 22.43 years

Explanation:

The financial calculator can be used to determine the number of years to maturity as follows:

PMT=31     (semiannual coupon=$1,000*6.2%*6/12=$31)

I/Y=4.23%     (semiannual yield to maturity=8.46%*6/12=4.23% )

PV=-774.50 (current market price=$774.50)

FV=1000 (face value of $1000)

lastly enter N=44.8643664

Note that 44.8643664  is stated in terms of semiannual periods

Years=44.8643664 *6/12= 22.43  years

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