Hal Fritz purchased a $5,000 bond at 95. The annual interest is 6%.
What was the cost of the bond?
What was the annual interest?
What is the yield (to nearest tenth of a percent)?
Hal Fritz purchased a $5,000 bond at 95. The annual interest is 6%.
What was the cost of the bond? $ 4750.00
What was the annual interest? $ 300.00
What is the yield (to nearest tenth of a percent)? 6.3 %
what is the answer
cost of bond- $4,750.00
Annual intrest- $300.00
percentage- 6.3%
To find the cost of the bond, we need to multiply the face value of the bond by the bond price. The face value of the bond is $5,000 and the bond price is 95%.
Cost of the bond = Face value of the bond * Bond price
Cost of the bond = $5,000 * 0.95
Cost of the bond = $4,750
So, the cost of the bond is $4,750.
To find the annual interest, we need to multiply the face value of the bond by the interest rate.
Annual interest = Face value of the bond * Interest rate
Annual interest = $5,000 * 0.06
Annual interest = $300
So, the annual interest is $300.
To calculate the yield, we need to divide the annual interest by the cost of the bond and multiply by 100 to get the percentage.
Yield = (Annual interest / Cost of the bond) * 100
Yield = ($300 / $4,750) * 100
Yield ≈ 6.3%
So, the yield of the bond is approximately 6.3% (to the nearest tenth of a percent).