What is the yield to maturity on a 2-year, $1000 discount bond with a current price...
What is the yield to maturity on a 2-year, $1000 discount bond with a current price of $947? Yield to maturity = nothing percent. (Round your response to one decimal places.)
Homework Answers
Current price of the bond = 947
Time to maturity = 2 years
Face value = $1000
Yield to maturity is found as
947 = 1000 * (1 + YTM)^-2
YTM = (947/1000)^(-1/2) - 1
= 2.76%
Hence the yield to maturity is 2.8%.
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