Travel has 7 percent, semiannual, coupon bonds outstanding with a current market price of $1,020.46, a par value of $1,000, and a yield to maturity of 6.72 percent. How many years is it until these bonds mature

Answer: 9.685 years (approximately 9.7years)

the bond would take 9.685 years to mature

Explanation:

Using yield to maturity formula

YTM = C + (fv - pv) / n : (fv + pv) / 2

C = coupon rate = 7% of par value

= (7/100) * 1000

= $70

Fv = face value (par value) = $1,000

Pv = price = $1,020.46

YTM = yield to maturity = 0.0672

n = number of years to maturity ... ?

Using the above formula;

0.0672 = 70 + (1000-1020.46) / n : (1000+1020.46) / 2

0.0672 = 70 + (-20.46) / n : (2020.46) / 2

0.0672 = 70 + (-20.46) / n : 1010.23

70 - (20.46) / n = 0.0672 * 1010.23

70 - (20.46) / n = 67.887456

-20.46 / n = 67.887456 - 70

-20.46 / n = - 2.112544 (Cross multiply

-20.46 = - 2.112544n

Divide both sides by - 2.112544

n = 9.6850

The number of years for the bond to mature is 9.685 years (approximately 9.7years)