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Ivan has a $500 bond with a 5.8% coupon. Ivan purchased this bond for $515.
What is the yield of this new bond?

Ivan has a 500 bond with a 58 coupon Ivan purchased this bond for 515 What is the yield of this new bond class=

Respuesta :

febreselisa5

Answer:

The yield is 5.974%

Step-by-step explanation:

We proceed as follows ;

coupon rate = Annual coupon payment/bond face value.

The face value is the original amount which the bond was bought and that is $515 according to the question. While the coupon rate is 5.8%

mathematically, annual coupon payment = coupon rate * bond face value = 0.058 * 515 = $29.87

mathematically;

current yield = Annual coupon payment/bond price

current yield = 29.87/500

= 0.05974 or simply 5.974%

so the answer is c. 5.6%

Step-by-step explanation:

Charmber06

Answer:

A 6.0%

Step-by-step explanation:

coupon rate = Annual coupon payment/bond face value.

The face value is the original amount which the bond was bought and that is $515 according to the question. While the coupon rate is 5.8%

mathematically, annual coupon payment = coupon rate * bond face value = 0.058 * 515 = $29.87

mathematically;

current yield = Annual coupon payment/bond price

current yield = 29.87/500

= 0.05974 or simply 5.974%

5.974 rounded to 6.0 %