Question

Question 9
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 yield-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?)


1.0057
1.0057



0.0057
0.0057



−
0.0057
−0.0057



2.0057
2.0057


1 point
10.
Question 10
You have a treasury

Answer 1

To calculate the annual yield-to-maturity (YTM) for a one-year zero-coupon bond, you can use the following formula:

\[
\text{YTM} = \frac{F - P}{P} + r
\]

Where:
- \( F \) is the face value of the bond (in this case, $100).
- \( P \) is the price of the bond (in this case, $99.43).
- \( r \) is the desired yield, expressed as a decimal.

Since this is a zero-coupon bond, we need a simpler formula:

\[
YTM = \frac{F - P}{P}
\]

Substituting the given values:

\[
YTM = \frac{100 - 99.43}{99.43}
\]

Calculating this gives:

\[
YTM = \frac{0.57}{99.43} \approx 0.005726
\]

Expressed as a percentage or rounded, this is approximately 0.0057.

Thus, the annual yield-to-maturity of the bond is \( 0.0057 \) or \( 0.57\% \).

Based on the options you provided, the correct answer is:

**0.0057**