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If ABC 10% bond closed at 101 3/8 down 3/4 for the day and would provide a current yield of 9.87%. The current yield if the bond had been purchased on the previous trading day would be:

Respuesta :

Answer:

The current yield if the bind has been purchased yesterday is 9.79%

Explanation:

The formula for current yield is given as:

current yield = annual interest rate /current market price

The annual interest rate is 10%,which translates into 10% of the par value of $100, that is $10

Current market price today is $101 3/8, which is  the same $101+$0.375 =$101.375

The price is 3/4 less than yesterday's price

Yesterday's price =$101.375+$0.75

Yesterday's price=$102.13

Yesterday's yield=10/102.13

yesterday's yield =9.79%

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