Ask Question
19 August, 04:00

g suppose that a commercial bank wants to buy treasury bills. these instruments pay $500 in one year and are currently selling for 5012. what is the the yield to maturity

+2
Answers (1)
  1. 19 August, 06:39
    0
    9.98%

    Explanation:

    Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity. It is a long term return which is expressed in annual term.

    As per given data

    Annual Payment = $500

    Current price = $5,012

    $500 payment each year for indefinite period of time is a perpetuity, value of perpetuity can be calculated as follow

    Current Price = Annual Payment / Yield to maturity

    Yield to maturity = Annual Payment / Current Price

    Yield to maturity = (Annual payment / Current price) x 100

    Yield to maturity = ($500 / $5,012) x 100

    Yield to maturity = 0.0998 x 100

    Yield to maturity = 9.98%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “g suppose that a commercial bank wants to buy treasury bills. these instruments pay $500 in one year and are currently selling for 5012. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers