Explore BrainMass
Share

Explore BrainMass

    Zero Coupon Bond: Calculate the YTM (yield to maturity)

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.

    © BrainMass Inc. brainmass.com October 10, 2019, 12:13 am ad1c9bdddf
    https://brainmass.com/business/bond-valuation/zero-coupon-bond-calculate-ytm-yield-maturity-283386

    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