Question

Shinoda Corp. has 9.64 percent coupon bonds making annual payments with a YTM of 6.7 percent. The current yield on these bonds is 7.99 percent. How many years do these bonds have left until they mature?

Answer 1

Accurate calculation of the years until maturity for Shinoda Corp.'s bonds requires the current market price or usage of a financial calculator or software, as the provided formula necessitates iterative solutions.

Step-by-step explanation:

The number of years remaining until the bonds issued by Shinoda Corp. mature can be determined by using the current yield, coupon rate, and yield to maturity (YTM). The current yield is given as 7.99%, which can be calculated as the annual coupon payment divided by the current market price of the bond (Current Yield = Annual Coupon Payment / Current Market Price). Since we do not have the current market price, we can use the YTM and coupon rate to approximate the remaining years to maturity.

The given coupon rate is 9.64%, which translates to an annual coupon payment of $96.40 for a $1,000 face-value bond. With a YTM of 6.7%, the formula to approximate the remaining years to maturity is: Number of Years to Maturity = (Annual Coupon - (Current Market Price - Face Value) / Years to Maturity) / (Annual Coupon + YTM) However, the above components and formula alone are insufficient for direct calculation without the current market price or an additional financial calculator or software to solve for the exact number of years.