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Dima020 [189]
3 years ago
14

An investor pays $989.40 for a bond. The bond has an annual coupon rate of 4.8%. What is the current yield on this bond

Business
1 answer:
strojnjashka [21]3 years ago
4 0

Answer:

4.85%

Explanation:

An investor makes a payment of $989.40 for a bond

The bond has a coupon rate of 4.8%

Therefore, the current yield on the bond can be calculated as follows

= 4.8×10/989.40

= 48/989.40

= 0.0485×100

= 4.85%

Hence the current yield on the bond is 4.85%

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