A 9%, semiannual, level-coupon Treasury note will mature in 6 years , at which point it will repay its principal of $5,000. The note is currently selling for $5,746.55. What is its true
Yield-to-maturity?

Question

Quizplus · Accepted Answer

We can solve for the yield-to-maturity using a financial calculator or Excel's RATE function. Using Excel's RATE function with the following inputs: RATE(12,6,-5746.55,5000,0,2) we get a result of 6.10%, which is closest to choice D. Therefore, the answer is D.

A 9%, Semiannual, Level-Coupon Treasury Note Will Mature in 6