Question

A zero-coupon bond with face value $1,000 and maturity of 3 years sells for $939.6. What is its yield to maturity? Enter your answer as a decimal, rounded to four decimal places. Your Answer: Answer uestion 11 (1 point) Two bonds have identical times to maturity and coupon rates. One is callable at 105, the other at 110. Which bond should be priced higher? Callable at 105 Callable at 110

Answer 1

Answer to Question 10:

Face Value = $1,000
Current Price = $939.6

Time to Maturity = 3 years

Let Annual YTM be i%

$939.6 = $1,000 * PVIF(i%, 3)

Using financial calculator:
N = 3
PV = -939.6
PMT = 0
FV = 1000

I = 2.10%

Annual YTM = 2.10%