Question

Consider a zero-coupon bond with a $1000 face value and 15 years left until maturity. If the bond is currently trading for $431, then the yield to maturity on this bond is closest to __

Answer 1

Answer:

the yield to maturity is 5.77%

Explanation:

The computation of the yield to maturity is shown below:

Given that

FV = $1,000

PV = $431

PMT = $0

NPER = 15

The formula is shown below:

= RATE(NPER,PMT,-PV,FV,TYPE)

After applying the above formula, the rate of interest is 5.77%

Hence, the yield to maturity is 5.77%