Use the table for the question(s)below.
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value):
-The yield to maturity for the three-year zero-coupon bond is closest to:
A)5.4%.
B)5.8%.
C)5.6%.
D)6.0%.

Question

Use the table for the question(s)below.
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value): 
-The yield to maturity for the three-year zero-coupon bond is closest to:
A)5.4%. 
B)5.8%. 
C)5.6%. 
D)6.0%.

Quizplus · Accepted Answer

The yield to maturity for a zero-coupon bond is the annual rate of return an investor can expect to receive if they hold the bond until maturity. The yield to maturity for the three-year zero-coupon bond is closest to 5.4% because this is the rate that would make the present value of the bond's future cash flows equal to its current price.

Use the Table for the Question(s)below