Consider the following $1,000-par-value zero-coupon bonds: $\begin{array}{ccc}
&\text { Years of } \
\text { Bond } & \text { Maturity } & \text { Price } \
\hline\text { A } & 1 & \$ 909.09 \
\text { B } & 2 & 811.62 \
\text { C } & 3 & 711.78 \
\text { D } & 4 & 635.52
\end{array}$ The yield to maturity on bond A is

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) for a zero-coupon bond is calculated using the formula: $ \text{YTM} = \left(\frac{\text{Face Value}}{\text{Price}}\right)^{\frac{1}{\text{Years}}} - 1 $. For bond A, $ \text{YTM} = \left(\frac{1000}{909.09}\right)^{1} - 1 = 0.10 $ or 10%.

Consider the Following $1,000-Par-Value Zero-Coupon Bonds The Yield to Maturity on Bond a Is A) 10

Consider the Following $1,000-Par-Value Zero-Coupon Bonds The Yield to Maturity on Bond a Is
A) 10