A saver buys a $10,000 zero-coupon government bond for $9,375. When it matures a year from now, what will be the approximate implied interest rate?

Question

Quizplus · Accepted Answer

The implied interest rate can be found using the formula:
Implied interest rate = (face value - purchase price) / purchase price * 100%
Implied interest rate = (10,000 - 9,375) / 9,375 * 100%
Implied interest rate ≈ 6.67%

A Saver Buys a $10,000 Zero-Coupon Government Bond for $9,375