Determine the yield to maturity (to the nearest tenth of 1 percent) of an 8-year zero coupon bond ($1,000 par value) that is currently selling for $521.
A)6.0%
B)7.9%
C)11.5%
D)8.5%

Question

Quizplus · Accepted Answer

$521 = $1,000(PVIFkd, ₈)
PVIFkd,₈ = 0.521
kd = 8.5% by calculator or interpolation
Solution using calculator: N = 8
PV = -521
PMT = 0
FV = 1000
Solve for I = 8.49%

Determine the Yield to Maturity (To the Nearest Tenth of 1