Atlantis Fisheries issues zero coupon bonds on the market at a price of $415 per bond....

Atlantis Fisheries issues zero coupon bonds on the market at a price of $415 per bond. Each bond has a face value of $1,000 payable at maturity in 17 years. What is the yield to maturity for these bonds?

Solutions

Expert Solution

Yield to maturity of zero coupon bond can be calculated by using present value formula
PV= FV/(1+r)^n

Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number

415= $1000/( 1+r)^17

415/1000=1/(1+r)^17
0.415=1/(1+r)^17
r =5.31%

Correct Answer = 5.31%

jeff jeffy answered 2 years ago

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