10.70% - Option D
Explanation:
One-year interest rate one year from now:
[tex]=(1+.2750)^{\wedge} 2 /(1+16 \%)-1[/tex]
[tex]=1.275 * 1.275 / 0.16[/tex]
= 1.625625 divide by 0.16
=10.160
Therefore, an approximate answer is 10.70%
Respect Maturity (YTM) – in any case alluded to as recovery or book yield – is the theoretical pace of return or loan cost of a fixed-rate security, for example, a security. The YTM depends on the conviction or understanding that a financial specialist buys the security at the present market cost and holds it until the security has developed (arrived at its full worth), and that all premium and coupon installments are made in a convenient manner.
