Atlantis Fisheries issues zero coupon bonds on the market at a price of $469 per
ID: 2643131 • Letter: A
Question
Atlantis Fisheries issues zero coupon bonds on the market at a price of $469 per bond. Each bond has a face value of $1,000 payable at maturity in 10 years. What is the yield to maturity for these bonds?(Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Atlantis Fisheries issues zero coupon bonds on the market at a price of $469 per bond. Each bond has a face value of $1,000 payable at maturity in 10 years. What is the yield to maturity for these bonds?(Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
YTM i Yield to Maturity
YTM = (Face Value / Current Price of Bond) ^ (1 / Years to Maturity) - 1
Face value = $1000
Current Price = $469
Years to maturity = 10Years
YTM = ((1000/469) ^ (1/10)) -1
= (2.1322 ^ 0.1) - 1
= 1.0787 - 1
= 0.0787
= 7.87% Answer
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