A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity of
A)3 percent.
B)20 percent.
C)25 percent.
D)33.3 percent.

Name: A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity of A)3 percent. B)20 percent. C)25 percent. D)33.3 percent.
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Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated as (Face Value - Purchase Price) / Purchase Price. Here, it is ($20,000 - $15,000) / $15,000 = $5,000 / $15,000 = 0.3333 or 33.3%.

A Discount Bond Selling for $15,000 with a Face Value