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17 January, 10:29

Sure Tea Co. has issued 9% annual coupon bonds that are now selling at a yield to maturity of 10% and current yield of 9.8375%. What is the remaining maturity of these bonds?

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  1. 17 January, 10:37
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    20 years

    Explanation:

    Current yield = 0.098375, so bond price can be solved from the following: $90/price = 0.098375 * price =

    price = 90/0.098375

    price = 914.87 dollars

    To compute the remaining maturity

    put these values in financial calculator

    PV = 914.87, FV = 1,000, PMT = 90, i = 10; compute

    n = 20.0 years
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