Explanation:
To calculate the Yield to Maturity (YTM) for the treasury note, we can use a financial calculator with the following inputs based on annual compounding:
$1,200 (The current price is a cash outflow)$1,500 * 10% = $150$1,500 (Par value received at maturity)Computing for I/Y (Yield to Maturity) gives approximately 17.34%.
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Q.53 An investor wants to purchase a $1,500 par-value treasury note that has a 10% coupon rate and is expected to mature in 4 years. If the current price of the Treasury note is $1,200, calculate the yield to maturity of the note.
A
15.22%
B
16.38%
C
16.59%
D
17.34%
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