Question

There is a zero coupon bond that sells for $4,456.90 and has a par value of...

There is a zero coupon bond that sells for $4,456.90 and has a par value of $10,000. If the bond has 23 years to maturity, what is the yield to maturity? Assume semiannual compounding.

a.3.4%

b.3.46%

c.3.43%

d.3.54%

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Answer #1

YTM is calculated using the RATE function as follows:-

=RATE(nper,pmt,pv,fv)

=RATE(23*2,0,-4456.9,10000)*2

=3.54%

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