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there is a zero-coupon bond. its face value is $1000 and maturity 1year, given that its market price is $800, need to find its expected
there is a zero-coupon bond.
its face value is $1000 and maturity 1year,
given that its market price is $800, need to find its expected return.
i want to know if this 'expected return' of zero-coupon bond is equal to the yield to maturity(ytm).
so my idea is that
ytm = (face value/ price of bond)^(1/maturity) - 1
= (1000/800)^1 - 1
= 0.25
= 25%
thus expected return is 25% * $800 = $200
is this correct?
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