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10 November, 05:22

9) The zero coupon bonds of JK Industries have a market price of $211.16, a face value of $1,000, and a yield to maturity of 7.39 percent. How many years is it until these bonds mature

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  1. 10 November, 05:25
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    It is 21.43 years until these bonds mature.

    Explanation:

    Price = Maturity value * 1 : (1 + r) ⁿ

    211.16 = 1000 * 1 : (1+0.0739) ⁿ

    211.16 = 1000 * 1 : (1.0739) ⁿ

    0.21116 = 1 : (1.0739) ⁿ

    (1.0739) ⁿ = 1 : 0.21116

    (1.0739) ⁿ = 4.736

    n = 21.43
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