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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

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hyderali230

Answer:

9.98%

Explanation:

YTM is the estimated return expected from an investment held until its maturity. it is a long term yield which is expressed in annual term

Annual Payment = $500

Current price = $5,012

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

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

Yield to maturity = 0.0998

Yield to maturity = 9.98%

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