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Isabella buys a $1,000 bond that matures in 10 years (that is, she lends $1,000 to the U.S. Treasury for 10 years). The bond pays her $50 every year for 10 years. When the bond matures at year 10, she will receive her $1,000 back as well as her last interest payment of $50.What is the annual interest rate (or yield) on Isabella's bond?

is it 50/1000= 5% yield

  • Economics -

    Yes. You're right.

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