Question

What is the bond equivalent yield of a bond if it has 110 days to maturity, a par value of $10,000, and is currently trading at $9740

Answer 1

8.86%

Step-by-step explanation:

Calculation for the bond equivalent yield

Using this formula

Bond Equivalent Yield = ((Par Value - Price) / Price) * (365/ days) * 100

Let plug in the formula

Bond Equivalent Yield=(($10,000 - $9,740) / $9,740) * (365 / 110) * 100

Bond Equivalent Yield=($260 / $9,740) * 3.32 * 100

Bond Equivalent Yield=0.02669* 3.32 * 100

Bond Equivalent Yield= 8.86%

Therefore the Bond Equivalent Yield is 8.86%