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BartSMP
1 month ago
10

A one-year zero coupon bond costs \$99.43$99.43 today. Exactly one year from today, it will pay \$100$100. What is the annual yi

eld-to-maturity of the bond? (I.e., what is the discount rate one needs to use to get the price of the bond given the future cash flow of \$100$100 in one year?) *Make sure to input all percentage answers as numeric values without symbols, and use four decimal places of precision. For example, if the answer is 6%, then enter 0.0600.
Business
1 answer:
Mariulka [3.8K]1 month ago
5 0

Answer:

0.00573

Explanation:

Today's bond cost is $99.43

The bond's value at the year's end is $100

The difference calculates to: $100 - $99.43 = $0.57

This amount of $0.57 indicates the bond's yield. Therefore, the yearly yield is computed as $0.57/$99.43 = 0.00573

This yield represents the one-year discount rate applicable for a future value of $100, where its present value is $99.43.

Final Answer

0.00573

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