High Noon Sun has a 5%,semiannual coupon bond with a current market price of €988.52.The bond has a par value of €1,000 and a yield to maturity of 5.29%.How many years is it until this bond matures?

Question

Quizplus · Accepted Answer

Using a financial calculator, the number of years until maturity can be found using the following key presses: 
N= 9 (since there are 18 semiannual periods until maturity) 
I/Y= 2.645 (since the yield to maturity is 5.29% and it is a semiannual coupon bond) 
PV= -988.52 (since this is the current market price) 
PMT= 25 (since the coupon payment is 5% of the par value and it is paid semiannually) 
FV= 1000 (since this is the par value at maturity)

Solving for N gives approximately 4.5 years. Therefore, the best choice is B) 4.5 years.

High Noon Sun Has a 5%,semiannual Coupon Bond with a Current