Question

Assume that a $1,000 bond issued in 2012 pays $100 in interest each year. What is the current yield on the bond if it can be purchased for

Instructions: Enter your responses as a percent rounded to one decimal place.

(a) $1,200? Yield on $1,200 bond is = ?%

(b) $1,000? Yield on $1,000 bond is = ?%

(c) $800? Yield on $800 bond is = ?%

Answer 1

80%

Answer 2

Assume that a $1,000 bond issued in 2012 pays $100 in interest each year. What is the current
yield on the bond if it can be purchased for
( a ) $1,200?
( b ) $1,000?
( c ) $800?