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20 June, 17:18

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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  1. 20 June, 17:29
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    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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