A zero‐coupon bond has 12 years to maturity and is selling for $300. Given the 24 semiannual periods, the power to be used in raising the ratio of $1,000/$300, or 3.3333, is 0.04167 (calculated as 1/(2 × 12)). Using a calculator with a power function produces a value of 1.05145. Subtracting the 1.0 and multiplying by 100 leaves a semiannual ytm, of 5.145 percent. The YTM is 10.29 percent.

Using a financial calculator,

Computing I/YR, we find the semiannual yield, ytm, to be 5.1445 percent. The YTM is 10.29 percent.

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N I/YR 24 ? -300 PV PMT FV 0 1,000