Tenure in Years: Understanding Maturity Date, YTM, and Duration

School: Florida International University - Course: FIN 4604 - Subject: Accounting

Tenure in Years1620 TodayMonday, April 03, 2023Monday, April 03, 2023 Maturity DateSaturday, October 02, 2038Monday, February 10, 2042 Face Value10001000 Componding in Year22 Coupon Rate8%8% N of Periods3240 Coupon $4040 Redemtion Value10001000 YTM7.5%7.5% Periodic YTM3.75%3.75% Current Price of Bond$1,046.14$1,051.38 Duration9.2910.14 A PeriodCash FlowPVF/PVAF = 3.75%Disc CF From 1 to 324018.46738.26 3210000.3079307.88 Bond Price1046.14 B PeriodCash FlowPVF/PVAF = 3.75%Disc CF From 1 to 324020.55822.04 3210000.2293229.34 Bond Price1051.38 C[ ( 1 + Y ) / Y ] - [ [ ( 1 + Y ) + T ( C - Y) ] / [ C [ [ ( 1 + Y )^ t ] - 1 ] + Y ] ] =18.897 Duration in years=Duration in Periods / 2 Duration in years=9.45 D[ ( 1 + Y ) / Y ] - [ [ ( 1 + Y ) + T ( C - Y) ] / [ C [ [ ( 1 + Y )^ t ] - 1 ] + Y ] ] 21.050 Duration in years=Duration in Periods / 2 Duration in years=10.53 Answer A$1,046.14 B$1,051.38 C9.29

D10.14

PVF = 1 / ( 1 + r)^n