Respuesta :
Initially, a bond with a $100 par value, semi-annual compounding, a 6% coupon, and a ten-year maturity period was issued. If it is presently trading at $97.22 and has 1.5 years till maturity, it yields an 8% annual percentage yield.
What is a bond?
A bond is a sort of security where the issuer (the debtor) owes the holder (the creditor) a debt and is required, depending on the terms, to repay the principal (i.e., amount borrowed) of the bond at the maturity date as well as interest (called the coupon) over a certain amount of time. The interest is typically due at regular intervals, such as every six months, once a year, and less frequently at other times. An IOU or kind of loan is what a bond is. Bonds give the borrower access to external capital for short-term investments or, in the case of government-backed securities, for the funding of current expenses.
Calculation:
Use financial calculator as
PV=-97.22
FV=100
PMT=[tex]\frac{100\times6 \%}{2}[/tex]
1/Y=8/2=4
N=3.00 semi annual
The time left to maturity =3/2=1.50 years
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