Question

Hal Fritz purchased a $5,000 bond at 95. The annual interest is 6%.

What was the cost of the bond? 

What was the annual interest? 

What is the yield (to nearest tenth of a percent)? 

Answer 1

Hi there :-)

Bond Cost = Face Value × Percent
5,000×0.95=4,750

Annual Interest=Face Value×Interest Rate
5,000×0.06=300

Annual Yield=Annual Interest×Bond Cost
(300÷4,750)×100=6.32%

Hope it helps