A man buys furniture that has a list price of $255. He is allowed a discount of 12% but must pay a sales tax of 3% on the cost.
The amount he actually pays is: (A) $217.67 (B) $231.13 (C) $224.40 (D) $232.50 (E) none of these
2 answers:
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0.063 is the current yield on Chester's bond.
Option - c
<u>Solution:</u>
Given: Annual interest is 6.2% and current price of bond is 98.626
To find: Current yield
Current Yield: The current yield is equal to the annual interest earned divided by the current price of the bond.
The formula to calculate the current yield is as follows,
On substituting the given values in the formula we get,
This value can be rounded off to 0.063.
Rounding off rules:
- First look at the digit to immediate right of rounding off digit
- If that digit is less than 5, do not change the rounding digit but drop all digits to the right of it.
- If that digit is greater than or equal to five, add one to the rounding digit and drop all digits to the right of it.
Current Yield:
Current yield is an investment's annual income (interest or dividends) divided by the current price of the security. This measure examines the current price of a bond, rather than looking at its face value.