Answer:
12.391%
Explanation:
The yield to maturity on the seven-year zero coupon bond can be determined using the present value below:
PV=FV/(1+r)^n
PV=current price=$441.46
FV=face value at redemption=$1000
r=unknown yield to maturity
n=duration of the zero coupon=7 years
441.46=1000/(1+r)^7
1000/441.46=(1+r)^7
divide index by 7 on both sides
( 1000/441.46)^(1/7)=1+r
1.123905524 =1+r
r=1.123905524 -1=12.39%
