Consider a zero-coupon bond that has a current price of $436.19 and matures in 10 years. What is its yield to maturity?
A) 0.86 percent
B) 8.65 percent
C) 8.00 percent
D) 58.80 percent
E) 6.564 percent

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) of a zero-coupon bond can be calculated using the formula: YTM = [(Face Value / Present Value)^(1/n)] - 1, where n is the number of years to maturity. Assuming a face value of $1000 (a common face value for bonds), the calculation would be: YTM = [($1000 / $436.19)^(1/10)] - 1, which approximates to 0.0865 or 8.65%.

Consider a Zero-Coupon Bond That Has a Current Price of $436.19