10 year, zero-coupon government €1000 par value bond sells today for 495€. what is the yield...

Question

Question

10 year, zero-coupon government €1000 par value bond sells today for 495€. what is the yield to maturity for that bond?

Answer 1

Answer #1

The yield to maturity of a n year zero coupon bond is found using the following equation

YTM = (race value, --1 Price

(€1000/10 YTM = €495) – 1

Yield to maturity for the bond = 7.29 % $\approx$ 7.3 %

Answer 2

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