A Treasury security that matures in one year has a face value of $10,000 and sells for $9,300. What is its yield-to-maturity, to the nearest tenth of a percent?
A)9.3%
B)7.5%
C)5.5%
D)7.0%

Question

Quizplus · Accepted Answer

Using the formula for yield-to-maturity:

YTM = (Face value / Price)^ (1/n) - 1

Where n is the number of years until maturity.

In this case, n = 1 and:

YTM = (10,000 / 9,300)^(1/1) - 1 
YTM = 0.075 or 7.5%

Therefore, the answer is B) 7.5%.

A Treasury Security That Matures in One Year Has a Face