Ask Question
15 June, 08:16

Belinda Herrera purchased a $5,000 bond at the quoted price of 94.125. The bond paid interest at a rate of 6%. What is the annual yield?

+3
Answers (1)
  1. 15 June, 08:44
    0
    6.37%

    Explanation:

    Annual yield is the annual dividend yield of a bond.

    Formula for annual yield = Annual dividend amount / Current price of the bond

    Annual dividend amount = Annual interest rate * Face value

    = 6% * $5,000

    = $300

    Current price = 94.125 means that the bond price is 94.125% of the Face value

    Current price = 0.94125 * 5000 = $4,706.25

    Therefore, annual yield = 300/4,706.25 = 0.0637 or 6.37%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Belinda Herrera purchased a $5,000 bond at the quoted price of 94.125. The bond paid interest at a rate of 6%. What is the annual yield? ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers