Question

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 $ 9, 500 when​ released?

A. 2.632​%

B. 5​%

C. 0.01​%

D. 5.263​%

Answer 1

Present Value of Zero Coupon Bond = Par Value/(1 + r)^t

So,

9500 = 10000/(1 + r)¹

r = 10000/9500 - 1

r = 5.263%

So,

YTM = 5.263%