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yield to maturity

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The US government issues a 1-year bond with a face value of $1,000 and a zero coupon. The market interest rate is 10 percent, what is the market price of the bond? If that bond price falls by 5 percent, what happens to its yield?

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Solution Preview

In a financial calculator, we input:
FV = 1000
payment = 0
interest rate = 10%
Number of years = ...

Solution Summary

The expert determines the market price and yield for bonds.

$2.19