Answered

Get the answers you need at Westonci.ca, where our expert community is dedicated to providing you with accurate information. Explore our Q&A platform to find reliable answers from a wide range of experts in different fields. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

What is the yield on a corporate bond with a $1000
face value purchased at a discount price of $875, if
it pays 8% fixed interest for the duration of the
bond?
yield = [ ? ] %
Give your answer as a percent rounded to the nearest
hundredth
Hint: yield = interest paid
price paid

Sagot :

Lanuel

Based on the calculations, the yield on this corporate bond is equal to 9.14%.

What is yield?

Yield can be defined as a measure of the income returned or earned from an investment such as the interest earned from holding a corporate bond.

Mathematically, the yield on an investment can be calculated by using this formula:

Yield = Interest paid/Price paid

However, we would need to determine the interest paid as follows:

Interest paid = value of bond × Interest rate

Interest paid = 1000 × 0.08

Interest paid = $80.

Substituting the given parameters into the formula, we have;

Yield = Interest paid/Price paid

Yield = 80/875 × 100

Yield = 9.14%.

Read more on yield here: https://brainly.com/question/27531875

#SPJ1

Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.