Anonymous
Anonymous asked in Business & FinancePersonal Finance · 4 weeks ago

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?

1 Answer

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  • Don G
    Lv 7
    4 weeks 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.

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