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 C is

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) for a zero-coupon bond is calculated using the formula: $ ( \frac{Face \ Value}{Price} )^{\frac{1}{Years}} - 1 $. For bond C: $ ( \frac{1000}{711.78} )^{\frac{1}{3}} - 1 \approx 0.12 $ or 12%.

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

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