Consider the case of a two-year discount bondthat is, a bond that pays no coupon and pays

Question:

Consider the case of a two-year discount bond—that is, a bond that pays no coupon and pays its face value after two years rather than one year. Suppose the face value of the bond is $1,000, and the price is $870. What is the bond’s yield to maturity? (In this case, provide a numerical answer rather than just writing the appropriate equation.)

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...