Final answer:
The yield to maturity (YTM) on a simple loan of $1,000 that requires a repayment of $2,000 in one year's time is 100%. This means the lender will double the money lent when the loan matures after a year.
Step-by-step explanation:
The question asks about the yield to maturity (YTM) on a simple loan. YTM is a financial concept typically used to calculate the total return anticipated on a bond if the bond is held until it matures. In the given scenario, a $1,000 loan requires a repayment of $2,000 in one year's time. To find the YTM:
YTM = (Total Repayment - Original Loan)/Original Loan
Plugging the numbers into the formula:
YTM = ($2,000 - $1,000)/$1,000
YTM = $1,000/$1,000
YTM = 1 or 100%
The yield to maturity on the loan in this case is 100%, which means the lender will double the amount lent in a year.