Cheryl wants to purchase a par value $500 bond from Agram Imports. Agram imports bonds have a market rate of 102.114 and offer 8.1% interest. If Cheryl's broker charges a commission of 2.5% of the market value of each bond sold, what is the current yield on Cheryl's bond?

A. 0.077

B. 0.078

C. 0.081

D. 0.040

Question

Anne Durham

Mathematics

27 September, 15:51

Cheryl wants to purchase a par value $500 bond from Agram Imports. Agram imports bonds have a market rate of 102.114 and offer 8.1% interest. If Cheryl's broker charges a commission of 2.5% of the market value of each bond sold, what is the current yield on Cheryl's bond?

A. 0.077

B. 0.078

C. 0.081

D. 0.040

+3

Answers (1)

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Cullen Ashley · Answer 1

According to my study, current yield is calculated by using the formula Interest or dividends divided by the current price of the security or simple the current price. So the current price in this given question is 102.114 and the interest is 8.1%, we will simply divide the two; 8.1 / 102.114 = 0.07732310947 or approximately. 077. The answer is A.