Question
In: Finance
Limberis Bio has zero-coupon bonds with a current market price of $725.00 with a face value...
Limberis Bio has zero-coupon bonds with a current market price of $725.00 with a face value of $1000, that mature in 7 years. What is the annual yield to maturity? Please show your work here. One or two decimal places is sufficient.
Solutions
Expert Solution
As we know the formula for Zero Coupon Bond Yield = (FV/PV)^(1/n) -1
FV = Face Value =$ 1000
PV = Present Market Value = $725
n = No of years to maturity =7 years
YTM = (1000/725) ^(1/7) -1
= (1.3793103448)^(1/7) -1
= 1.0470121304 - 1
= 0.047012
= 4.7%
jeff jeffy answered 2 years agoRelated Solutions
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