The zero coupon bonds of D&L Movers have a market price of $319.24, a face value of $1,000, and a yield to maturity of 9.17 percent. How many years is it until these bonds mature?

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(1000/319.24)}{\log(1.0917)} \approx 12.73 $ years.

The Zero Coupon Bonds of D&L Movers Have a Market