A bond that promises to pay $5,000 at the end of 12 months is selling for $4,695 today. What is its implied yield? Round your answer to the nearest tenth of a percent.
A)6.5%
B)9.0%
C)6.1%
D)9.4%

Question

Quizplus · Accepted Answer

The implied yield can be calculated using the formula: Yield = [(Face Value - Present Value) / Present Value] * 100. Substituting the given values: Yield = [($5,000 - $4,695) / $4,695] * 100 = 6.5%.

A Bond That Promises to Pay $5,000 at the End