The zero coupon bonds of MarkCo,Inc. have a market price of $394.47,a face value of $1,000,and a yield to maturity of 6.87%. How many years is it until this bond matures?

Question

Quizplus · Accepted Answer

The number of years until maturity can be calculated using the formula for the present value of a zero-coupon bond: $ PV = \frac{FV}{(1 + r)^n} $. Solving for $ n $ gives $ n = \frac{\log(FV/PV)}{\log(1 + r)} $. Substituting the given values: $ n = \frac{\log(1000/394.47)}{\log(1.0687)} \approx 14 $ years.

The Zero Coupon Bonds of MarkCo,Inc