A Treasury bond has a 3.4% coupon, a current price of $1,011.88, and 9 years to maturity. What is the yield to maturity?

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The yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate, and time to maturity. It is a complex calculation that requires solving for the interest rate in the bond price formula. Given the information, without performing the exact calculation, the correct answer is chosen based on the relationship between the bond's coupon rate, its price relative to the par value, and the time to maturity. Since the bond is trading at a slight premium (price is higher than the par value of $1,000) and has a relatively low coupon rate (3.4%), the YTM would be slightly less than the coupon rate because the investor is paying more upfront for the bond. Therefore, the closest and most reasonable choice given is 3.25%.

A Treasury Bond Has a 3