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What is the yield to maturity on a $1000.00 face-value discount bond maturing in one year that sells for $800.00?

User Purrell
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Since the bond is a discount bond, its only payment is the repayment of the par value at maturity, i.e., in one year. The current price is $800, so the yield to maturity is calculated as follows:

800 = 1000 / (1 + yield to maturity)
1 + Yield to maturity = 1.25
Yield to maturity = 25%
User Rany Ishak
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