A One-Year Discount Bond Has a Face Value of $1,000

question 76

Short Answer

A one-year discount bond has a face value of $1,000 and a price of $925.What is the yield to maturity on the bond? Report using percentages with two decimal places.

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Definitions:

Sight Draft

A financial document that demands immediate payment upon presentation to the drawee, often used in international trade.

Time Draft

A written order to pay a specified amount of money at a certain time in the future, often used in international trade.

Banker's Acceptance

A short-term financial instrument issued by a company that is guaranteed by a commercial bank. It is commonly used in international trade.

Commercial Draft

An instrument used in international trade where the seller instructs the buyer to pay a specified amount of money at a specified time.