Final answer:
To calculate the effective annual yield of a bond, you must account for both the coupon payments and capital gains over the bond's life. The exact yield to maturity requires complex financial calculations typically executed with iterative methods or financial calculators. The referenced material does not provide sufficient information to directly calculate the yield for the given bond.
Step-by-step explanation:
The student is asking about calculating the effective annual yield of a bond. To find the yield of the bond, you must consider the coupon payments, which are the interest payments made by the bond, and any capital gains, which in this case would be the difference between the market price and the face or par value when the bond reaches maturity.
For a bond with a coupon rate of 5% on a par value of $1,000, the semi-annual coupon payment would be $50 (5% of $1,000 divided by two). Over 19 years, and considering there are two coupon payments per year, the investor will receive a total number of 38 coupon payments. However, to calculate the effective annual yield, you need the compounded annual rate of return that equates the present value of all future coupon payments and the repayment of the par value at maturity with the current market price of the bond.
Unfortunately, to calculate the exact yield to maturity (YTM), complex financial calculations are often required that normally involve iterative methods or financial calculators. As such, providing the exact yield without the use of these tools or the formula is not feasible. The provided reference material simplifies a similar calculation with different figures, so it cannot be used directly to answer this student's question.