Bond Price Maturity (Years) Yield to Maturity A $ 300 30 — B 300 — 8 % C — 10 10?
Bond Price Maturity (Years) Yield to Maturity
A $ 300 30 —
B 300 — 8 %
C — 10 10
The following table shows some data for three zero-coupon bonds. The face value of each bond is $1,000
a. What is the yield to maturity of bond A? (Express your answer as a percentage rather than decimal.)
b. What is the maturity of B?
c. What is the price of C?
- Don GLv 78 months ago
a. Bond A YTM = 4.095%
b. Maturity of Bond B = 15.64 yrs, or 15 yrs, 8 mos.
c. Price of Bond C = 385.54
Both Bond A & B sell for $300, but A matures in 30 yrs, while B in 15+ yrs. That's why B's YTM is double A's. Bond C's YTM is 10%, in 10 yrs. Hence, the higher price.