The yield to maturity on a new one-year discount bond equals
A) (FV- P)/P.
B) (D - FV)/P.
C) (FV - P)/FV.
D) (P - FV)/FV.

Name: The yield to maturity on a new one-year discount bond equals A) (FV- P)/P. B) (D - FV)/P. C) (FV - P)/FV. D) (P - FV)/FV.
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Question

Quizplus · Accepted Answer

The yield to maturity (YTM) on a new one-year discount bond is calculated as (FV - P)/P, where FV is the face value of the bond and P is the purchase price. This formula represents the return on investment for the bondholder.

The Yield to Maturity on a New One-Year Discount Bond