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 D is

Question

Quizplus · Accepted Answer

To find the yield to maturity on bond D, we can use the bond pricing formula:

$635.52 = \frac{1000}{(1 + y)^4}$

Solve for y:

$(1 + y)^4 = \frac{1000}{635.52}$

$(1 + y) = (\frac{1000}{635.52})^\frac{1}{4}$

$y = (\frac{1000}{635.52})^\frac{1}{4} - 1$

$y = 0.12$ or 12%

Therefore, the answer is C) 12%.

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

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