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) 11.5%
C) 7.9%
D) 8.5%

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) for a zero-coupon bond can be calculated using the formula: YTM = [(Face Value / Present Value)^(1/n)] - 1, where n is the number of years to maturity. Plugging in the values: YTM = [(1000 / 521)^(1/8)] - 1, which gives approximately 8.5%.

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