Question at position 12 A 12-year bond was issued 4 years ago. Its tenor is equal to:A 12-year bond was issued 4 years ago. Its tenor is equal to:12 years 8 years4 years

Question

BlackTom AI · Accepted Answer

Question restatement: A 12-year bond was issued 4 years ago. Its tenor is equal to:

Option 1: 12 years
- Why this might be tempting: It mirrors the original nominal term of the bond. 
- Why it’s incorrect: The bond has already been in place for 4 years, so the remaining time to maturity is not the full 12 years. The concept of tenor here refers to the remaining time until maturity, not the initial term.

Option 2: 8 years
- Why this is plausible: If the original tenor was 12 years and 4 years have elapsed, the remaining maturity is 12 − 4 = 8 years. This aligns with the standard definition of tenor as the time left to maturity.
- Why it’s correct: The remaining time to maturity after 4 years is indeed 8 years, assuming no unusual features like call provisions that could shorten the term.

Option 3: 4 years
- Why this is incorrect: The 4 years already elapsed since issuance, so the bond is not 4 years to maturity unless the original tenor was 8 years, which it was not in this case.
- Key misconception: Confusing elapsed time with remaining time to maturity. Tenor refers to the time left, not the time already passed.

Summary perspective: The crucial idea is to distinguish between original term and remaining term. With a 12-year issuance and 4 years elapsed, the remaining maturity is 8 years, not 12 or 4.

Question at position 12 A 12-year bond was issued 4 years ago. Its tenor is equal to:A 12-year bond was issued 4 years ago. Its tenor is equal to:12 years 8 years4 years

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