It’s from Wiley test bank, hope someone can comment on. I used annual compounding and the answer says wrong.
The yield to maturity (YTM) of a 20‐year, U.S. zero‐coupon bond currently selling at $350 is closest to:
5.32%
5.39%
5.46%
You Answered Incorrectly.
The second choice is incorrect. The yield to maturity of a zero‐coupon can be calculated by solving the appropriate rate that will discount the $1,000 par value bond to its current price of $350. It can be computed as N = 40; PV = 350; FV = 1,000; CPT → I = 2.6593 × 2 = 5.32.