Zero coupon bonds: Rockinghouse Ltd plans to issue seven-year zero coupon bonds. It has learned that...
Zero coupon bonds: Rockinghouse Ltd plans to issue seven-year zero coupon bonds. It has learned that these bonds will sell today at a price of $414.42. Face value of bonds - $1000. Yield to maturity on these bonds is ____%
(Round your answer to 2 decimal places. All intermittent calculations should be rounded to 4 decimal places before carrying to next calculation.)
Homework Answers
Price = FV / (1 + r)n
414.42 = 1000 / (1 + r)7
(1 + r)7 = 2.4130
1 + r = 1.1341
r = 0.1341 or 13.41%
Yield to maturity is 13.41%
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Zero coupon bonds: Rockinghouse Ltd plans to
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