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?
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