Atlantis Fisheries issues zero coupon bonds on the market at a price of $642 per
ID: 2714485 • Letter: A
Question
Atlantis Fisheries issues zero coupon bonds on the market at a price of $642 per bond. Each bond has a face value of $1,000 payable at maturity in 13 years. What is the yield to maturity for these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Atlantis Fisheries issues zero coupon bonds on the market at a price of $642 per bond. Each bond has a face value of $1,000 payable at maturity in 13 years. What is the yield to maturity for these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
Future Value=(1+r)raise to n*Present Value (1+r)raise to 13*642=1000 (1+r)raise to 17=1000/642 (1+r)raise to 17=1.5576 Checking the Table (1+r)raise to n(Future Value Table) YTM is between 3% and 4% Exact YTM=3.45% Check YTM=3.45% 997.7726 (Approx)
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