Question:
Suppose Amar borrows ₹ 1000 from Ujala. After one year, Ujala wants ₹ 1100 back from Amar. The yield to maturity in percent (%) on this borrowing is ______(round off to one decimal place).}
Suppose Amar borrows ₹ 1000 from Ujala. After one year, Ujala wants ₹ 1100 back from Amar. The yield to maturity in percent (%) on this borrowing is ______(round off to one decimal place).}
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For a one-year loan/bond, YTM $=\dfrac{\text{Repayment}-\text{Investment}}{\text{Investment}}\times 100%$. Here: $(1100-1000)/1000=10.0%$.
Updated On: Sep 1, 2025
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Correct Answer: 10
Solution and Explanation
Step 1: Compute one-year return (YTM for a one-year loan).
\[ \text{YTM}=\frac{\text{Amount repaid} - \text{Amount borrowed}}{\text{Amount borrowed}} =\frac{1100-1000}{1000}=0.10. \] Step 2: Convert to percentage and round.
$0.10 \Rightarrow 10.0%$ (already at one decimal place).
Therefore, the YTM is \fbox{10.0%}.
\[ \text{YTM}=\frac{\text{Amount repaid} - \text{Amount borrowed}}{\text{Amount borrowed}} =\frac{1100-1000}{1000}=0.10. \] Step 2: Convert to percentage and round.
$0.10 \Rightarrow 10.0%$ (already at one decimal place).
Therefore, the YTM is \fbox{10.0%}.
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