A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced...

 

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A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both bonds are priced at an 8% nominal yield rate convertible semi-annually and have the same price. In how many years should the new bond mature? A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both bonds are priced at an 8% nominal yield rate convertible semi-annually and have the same price. In how many years should the new bond mature?

Answer rating: 100% (QA)

To find the number of years the new bond should mature we need to compare the characteristics of the ... View the full answer