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26 May, 13:23

John buys a $1,000 bond that pays 6% annual interest at 75. what is john's annual yield?

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  1. 26 May, 13:26
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    To calculate the current yield of bonds.

    We have the given par value of $1000, a market price of $750 and an interest rate of 6%.

    Formula of current yield:

    Yield = (interest rate * par value) / (market price) * 100%

    = ((0.06 * $1000) / $750) * 100%

    = ($60/$750) * 100%

    =0.08 * 100%

    = 8%
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