A person buys a bond with a face value of $10,000 for $9,325.Each year until the maturity date the bond buyer receives $750 from the issuer of the bond.The yield on the bond is
A) 8.04 percent.
B) 7.5 percent.
C) 10.0 percent.
D) 6.75 percent.
E) There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

To calculate the yield on the bond, we need to use the following formula:

Yield = (Annual interest payment / Purchase price) x 100%

Plugging in the values given, we get:

Yield = ($750 / $9,325) x 100%
Yield = 8.04%

Therefore, the yield on the bond is 8.04 percent. The correct answer is A.

A Person Buys a Bond with a Face Value of $10,000