Gordon Industries has 6 percent coupon bonds outstanding with a face value of $1,000 and a market price of $959.21. The bonds pa
1 answer:
At the current interest rate of 6.5%, the bonds will mature in 12 years.
CALCULATIONS:
RATE= 6.5%
PMT= 1000$*6% = 60$
PV= 959.21$
FV= 1000$
NO. OF YEARS TO MATURE= NPER(rate, pmt, -pv,fv,0)
=NPER(6.5%,60$,-959.21$,1000$,0)
=12 YEARS
A coupon bond, also known as a bearer bond or bond coupon, is a debt obligation that includes semiannual interest coupons. The issuer keeps no record of coupon bond purchasers, and the purchaser's name is not printed on any kind of certificate. Between the time the bond is issued and the time it matures, bondholders receive these coupons.
Coupons are typically described in terms of the coupon rate, which is the yield paid on the date of issuance by a coupon bond. The interest rate on the coupon is subject to change. The coupon rate is calculated by adding all of the annual coupons and dividing the total by the bond's face value.
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