What is the yield to maturity on a simple loan that requires payment of $500 plus $30 in interest one year from now?
A)6%
B)6.38%
C)5.3%
D)Not enough information has been provided to determine the answer.

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated as the interest payment divided by the principal amount. Here, the interest is $30 and the principal is $500. So, YTM = ($30 / $500) * 100% = 6%.

What Is the Yield to Maturity on a Simple Loan