Zero Coupon Bond: Calculate the YTM (yield to maturity)
Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the bond is currently trading for $459, what is the yield to maturity on this bond? Show calculations.
Please show all calculations with explanation in excel or word.
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Solution Preview
1. Step 1
Look at the value of the bond when it will reach maturity. We have a bond which will be worth $1000 in ten years.
2. Step 2
Check the price that you paid for the bond. We have $459.
3. Step 3
Subtract the number of years between the zero coupon bonds maturity ...
Solution Summary
The solutuon calculates the YTM (yield to maturity) for Zero Coupon Bond
$2.19