The zero-coupon bonds of Cold Pak Transport have a market price of $460.23, a face value of $1,000, and a yield to maturity of 8.42%. How many years is it until these bonds mature?

Question

Quizplus · Accepted Answer

The formula to calculate the time to maturity for a zero-coupon bond is: $ t = \frac{\ln(\frac{FV}{PV})}{\ln(1 + r)} $, where $FV$ is the face value, $PV$ is the present value, and $r$ is the yield to maturity. Plugging in the given values: $ t = \frac{\ln(\frac{1000}{460.23})}{\ln(1 + 0.0842)} \approx 9.60 $ years.

The Zero-Coupon Bonds of Cold Pak Transport Have a Market