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What is the yield to maturity of a one-year, risk-free, zero-coupon bond with a $10,000 face...

What is the yield to maturity of a one-year, risk-free, zero-coupon bond with a $10,000 face

value and a price of $9400 when released?

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Homework Answers

Answer #1

YTM = FV / PV -1

YTM = 10000/9400 -1

YTM = 6.38%

OR

Using financial calculator BA II Plus - Input details:

#

FV = Future Value / Face Value =

-$10,000.00

PV = Present Value =

$9,400.00

N = Number of years remaining x frequency =

1

PMT = Payment = Coupon rate x Face value / frequency =

$0.00

CPT > I/Y = Rate per period =

                        6.382979

YTM = Frequency/100 x Rate = 1/100*6.382979 =

6.38%
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