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12 June, 22:32

Tim has a $5000 bond with a 4.6% coupon. Tim purchased this bond for $5195. What is the yield of this new bond

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  1. 12 June, 22:48
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    0.67%

    Step-by-step explanation:

    When Tim's bond matures, he will receive ...

    $5000 + 4.6% * $5000 = $5230

    As a fraction of his investment, this is ...

    $4230/$5195 = 1.006737 = 1 + 0.67%

    The yield for Tim is 0.67%.
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