# Calculate Yield To Maturity For Bonds

Question

1.

 Maturity (years) 1 2 3 4 5 Price \$97.25 \$94.53 \$91.83 \$89.23 \$87.53

The above table shows the price per \$100 face value of several risk-free, zero-coupon bonds. What is the yield to maturity of the three-year, zero-coupon, risk-free bond shown?

A. 2.83%
B. 2.85%
C. 2.86%
D. 2.88%

2. Which of the following statements is FALSE?

A. The internal rate of return (IRR) of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default free bond at its current price and hold it to maturity.
B. The yield to maturity of a bond is the discount rate that sets the future value (FV) of the promised bond payments equal to the current market price of the bond.
C. Financial professionals also use the term spot interest rates to refer to the default-free zero-coupon yields.
D. When we calculate a bond’s yield to maturity by solving the formula, price of an n-period bond =
Coupon/ (1+ YTM)1 + Coupon/ (1+ YTM)2 + …..+ Coupon + Face/ (1+ YTM)n, the yield we compute will be a rate per coupon interval.

Summary

These short questions belong to Finance. The 1st question is about the yield to maturity for zero-coupon, risk-free bonds. The 2nd question is about finding a false statement.

Total Word Count NA

• Rasha

this is a very good website

• maani

I have 50 questions for the same test your page is showing only 28

• joeanne

• joeanne

hi can anyone help or guide me to my assignments. thanks

• Monik

• Cristina

This solution is perfect ...thanks

• Janete

Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

• Sandeep

Perfect bank of solution.

• Oxana

great !

• Paul Brandon-Fritzius

thanks for the quick response. the solution looks good. :)

• tina Johnson

thnx for the answer. it was perfect. just the way i wanted it.

• Giuseppe

works fine.