Lily Adams purchased a $1,000 bond at 70. The bond pays 4%
What was the cost of the bond?
What was the annual interest?
What is the yield (to the nearest tenth of a percent)?
(please only post of you know answer or at least will tell me how to get the answers on my own/ tell me the problem i would need to input into a calculator to get the answer.)
To determine the cost of the bond, multiply the purchase price (70) by the face value of the bond ($1,000):
Cost of the bond = 70 * $1,000 = $70,000.
Next, to find the annual interest, multiply the cost of the bond by the stated interest rate (4% or 0.04):
Annual interest = $70,000 * 0.04 = $2,800.
Finally, to calculate the yield, divide the annual interest by the cost of the bond and multiply by 100 to express it as a percentage:
Yield = (Annual interest / Cost of the bond) * 100
Yield = ($2,800 / $70,000) * 100 = 4%.
Therefore, the cost of the bond is $70,000, the annual interest is $2,800, and the yield is 4%.