Answer:
The question is not complete as the requirement below is missing.
What is the effective yield to maturity? (Assume annual compounding. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The effective interest yield is 10.00%
Explanation:
The effective interest yield was calculated using the rate formula in excel,the formula rate in excel is given =rate(nper,pmt,-pv,fv)
The nper is the duration of the investment and 5 years in this case
pmt is periodic coupon payment and it is $0
pv is the present value, that is the amount invested today which $745
fv is the amount receivable from the investment upon maturity and it is $1200
Find attached spreadsheet showing the detailed computation of effective interest yield.
