What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $850, if it pays 7% fixed interest for the duration of the bond?
What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $850, if it pays 7% fixed interest for the duration of the bond?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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What is the yield % help get the correct answer
![- The Science of Learning X +
What is the yield on a corporate bond with a $1000
face value purchased at a discount price of $850, if
it pays 7% 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
2023 International Academy of Science. All Rights Reserved.
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Transcribed Image Text:- The Science of Learning X +
What is the yield on a corporate bond with a $1000
face value purchased at a discount price of $850, if
it pays 7% 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
2023 International Academy of Science. All Rights Reserved.
Enter
Expert Solution
Step 1
A bond’s yield is the return to investors.
Bond issuers pay coupons or interests to investors or bond holders and yield is the return earned by the bond holders.
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