Question

The zero-coupon bonds of ABC Co have a market price of $318.46, a face value of $1,000, and a yield to maturity of 6.69 percent. How many years is it until these bonds mature

Answer 1

Answer:

17.67 years

Explanation:

The question requires us to calculate the period or years for the bond payments to equal the amount issued.

Using a Financial calculator set the following values :

PV =  - $318.46

FV =  $1,000

PMT = $0

I/YR = 6.69 %

P/YR = 1

N = ??

Inputting the data as above,  N will be 17.67 years

therefore,

The zero-coupon bonds of ABC Co will take 17.67 years