The zero coupon bonds of Mark Enterprises have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.87 percent based on semiannual compounding. How many years is it until this bond matures?

7 years to matures the bond

Explanation:

F=face value=1000

P=market price=bond price=394.47

r=yield to maturity=6.87%=semi annually, yearly = 6.87*2=13.74 %

T = years of maturity=?

Formula = YTD = (Face value/Bond price) ∧1/T-1

.1374 = (1000/394.47) ∧1/T-1

1+0.1374=2.535∧1/T

1.1374=2.535∧1/T

1.1374=[ (1.1374∧7) ]∧1/T

1=7/T

T=7 years.