MyLab Economics with Pearson eText -- Access Card -- for The Economics of Money, Banking and Financial Markets (My Econ Lab)
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Chapter 4, Problem 17AP
To determine

The yield to maturity if a discounted bond with face value $1,000 matures in one year and sells for $800.

Introduction:

Face value of a bond refers to the price of the bond that is decided by its issuer in the market. This face value is the amount which the holder of bond receives at the time of the maturity of the bond.

Discounted bond refer to a type of bond which has been issued at a value less than its face value or the par value and is traded in the secondary market.

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