Question

Briyana has a $500 bond with a 6% coupon. Briyana purchased this bond for $460. What is the yield of this new bond?

A. 6%
B. 4.6%
C. 6.3%
D. 6.5%

Answer 1

The correct answer is: 6.5%

Explanation:

Answer 2

Answer: The yield of this new bond is 6.5%.

To find the yield, we first need to multiply the value of the bond by the coupon percent. This is the amount paid to the bond holder.

500 x 0.06 = 30

So Briyana earned $30 on a bond that cost her $460.

30 / 460 x 100 = 6.5%