3% Treasury stock is currently valued at $104.60 and is redeemable in one year’s time. What is the redemption yield on the stock?
Answer in the book: 0.57%
Doubt:
Interest yield = 3
Loss on Redemption = 4.60
Redemption yield = -1.60 (3-4.60)
I think Redemption yield is negative. So, i am not convinced with the answer in the book.
Sir, please explain this.
FIA Forums
MA2 Kaplan Kit Q. No. 350
5y ago#1I agree with you and would calculate the redemption yield as -1.6/104.6 = -1.53%
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