Question

the yield to maturity of a 20-year zero-coupon bond that is selling for $372.50 with a value at maturity of $1,000 is____________

Answer 1

To find the yield to maturity of the bond, we can use the formula Current Bond Price = (Coupon Payment / (1 + Yield)^N) + (Face Value / (1 + Yield)^N)

Step-by-step explanation:

The yield to maturity of a bond can be calculated using the following formula:

Current Bond Price = (Coupon Payment / (1 + Yield)^N) + (Face Value / (1 + Yield)^N)

Where: Current Bond Price = $372.50, Coupon Payment = $0, Face Value = $1,000, N = 20 years

By solving this equation, we can find the yield to maturity of the bond.