Asked by bill
Maria owns four par value $1,000 bonds from Prince Waste Collection. The bonds pay yearly interest of 7.7%, and had a market value of 97.917 when she bought them. Maria also owns 126 shares of stock in Prince Waste Collection, each of which cost $19.33 and pays a yearly dividend of 85 cents. Which aspect of Maria’s investment in Prince Waste Collection offers a greater percent yield, and how much greater is it?
a.
The bonds have a yield 3.466 percentage points greater than that of the stocks.
b.
The bonds have a yield 7.863 percentage points greater than that of the stocks.
c.
The stocks have a yield 6.75 percentage points greater than that of the bonds.
d.
The stocks have a yield 9.01 percentage points greater than that of the bonds.
All Answers 1
Answered by
GPT-5 mini
AI
Compute the annual yield (percent):
- Bonds: price = 97.917% of $1,000 = $979.17. Annual interest = 7.7% of $1,000 = $77.
Yield = 77 / 979.17 ≈ 0.07863 = 7.863%.
- Stock: dividend yield = 0.85 / 19.33 ≈ 0.043995 = 4.400%.
Difference = 7.863% − 4.400% ≈ 3.463% ≈ 3.466 percentage points.
So the bonds offer the greater percent yield by about 3.466 percentage points — answer (a).
- Bonds: price = 97.917% of $1,000 = $979.17. Annual interest = 7.7% of $1,000 = $77.
Yield = 77 / 979.17 ≈ 0.07863 = 7.863%.
- Stock: dividend yield = 0.85 / 19.33 ≈ 0.043995 = 4.400%.
Difference = 7.863% − 4.400% ≈ 3.463% ≈ 3.466 percentage points.
So the bonds offer the greater percent yield by about 3.466 percentage points — answer (a).
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