The YTM for a zero-coupon bond with 10 years to maturity and selling for $450 is:

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) for a zero-coupon bond can be calculated using the formula: $$YTM = \left( \frac{Face\ Value}{Present\ Value} \right)^{\frac{1}{n}} - 1$$ where $n$ is the number of years to maturity. Assuming a face value of $1000 (common for bonds), present value of $450, and $n = 10$ years, the calculation is: $$YTM = \left( \frac{1000}{450} \right)^{\frac{1}{10}} - 1 \approx 0.0815$$ or 8.15 percent.

The YTM for a Zero-Coupon Bond with 10 Years to Maturity