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You are considering the purchase of a zero Coupon Bond with a Face Value of $100,000,...

You are considering the purchase of a zero Coupon Bond with a Face Value of $100,000, which matures in seven years. In the markets this bond is selling for $69,431.77. If you purchase the bond at this price what is the Yield-to-Maturity (YTM) on the investment? (The answer is a percent, round your answer to two decimal place, e.g. 4.75)

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Answer #1

rate =r= (fv/pv)^(1/t)-1 yield to maturity =r= 5.28% [if semi annual compounding) ((100000/69431.77)^(1/14)-1)*2

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