Question
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82?
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM?
A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay.
B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity.
C) YTM = 0.92%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity.
D) YTM = 0.92%, the maximum premium over face value of the bond that an investor should pay.
is there a formula for YTM needed for this question?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management Principles and Application
Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.
10th edition
536514119, 536514110, 978-0536514110
