Exhibit 38-1

-Refer to Exhibit 38-1.The yield on bond C is approximately

Question

Exhibit 38-1
 
-Refer to Exhibit 38-1.The yield on bond C is approximately

Quizplus · Accepted Answer

Based on the convention of bond pricing, bond C is priced at a discount, meaning its yield is higher than its coupon rate. Using the formula for the present value of a bond, we can solve for the yield:

110 + (110 / 1.1) + (110 / (1.1^2)) + (110 / (1.1^3)) + (110 / (1.1^4)) + (1,100 / (1.1^5)) = 981.82

Solving for the yield using trial and error or a financial calculator, we get approximately 20.8%. Therefore, the answer is B.

Exhibit 38-1 -Refer to Exhibit 38-1.The Yield on Bond C Is Approximately