-Refer to Exhibit 38-1.The yield on bond A is approximately
A) 7.5 percent.
B) 0.06 percent.
C) 6.0 percent.
D) 0.075 percent.

Name: -Refer to Exhibit 38-1.The yield on bond A is approximately A) 7.5 percent. B) 0.06 percent. C) 6.0 percent. D) 0.075 percent.
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Question

-Refer to Exhibit 38-1.The yield on bond A is approximately
A) 7.5 percent. 
B) 0.06 percent. 
C) 6.0 percent. 
D) 0.075 percent.

Quizplus · Accepted Answer

The yield on bond A is the annual coupon payment divided by the current price. The annual coupon payment is $100, and the current price is $1,333.33. Therefore, the yield on bond A is $100 / $1,333.33 = 0.075, or 7.5%.