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

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    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