The zero coupon bonds of Markco 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 maturity period can be calculated using the formula for the present value of a zero coupon bond: $ P = \frac{F}{(1 + r)^n} $. Solving for $ n $ with $ P = 394.47 $, $ F = 1000 $, and $ r = 0.0687 $, we find $ n \approx 14 $ years.

The Zero Coupon Bonds of Markco Have a Market Price