Tim has a $5000 bond with a 4.6% coupon Tim purchased this bond for $5195 what is the yield of the new bond?
1 answer:
Answer:
yield of this new bond is 4.42%
Step-by-step explanation:
given data
bond = $5000
coupon rate = 4.6%
purchased bond = $5195
to find out
yield of this new bond
solution
We get here first amount paid to the bond holder
amount paid = 4.6% × $5000
amount paid = $230
and
so Tim earned $230 on a bond that cost her $5195
so yield of this new bond =
yield of this new bond = 4.42 %
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