Question

A $10,000 Fargo Municipal bond at 102.5 pays 5% interest. Find the annual yield.

Answer 1

The formula for annual yield is

annual interest/bond cost

Answer 2

my answer doesnt match i got 9.75

Answer 3

So annual interest would be % of interest times 10,000

in this case 10000(0.05)

Answer 4

Annual interest is ..?

Answer 5

500

Answer 6

Ok now bond cost.

Bond cost is out of 100%.

Bond price here is $102.5 (1.025%)

(1.025%)(10000)=?

Answer 7

102.5

Answer 8

102.5?

1.025% times 10000 has to be greater than 10000.

Answer 9

nope says its 102.5

Answer 10

Hmm, maybe my percent symbol shouldn't be there.

1.025 times 10000=10250

Answer 11

You'll get your annual yield from

500/10250

Answer 12

and do i just move the decimal?

Answer 13

and thank yoou

Answer 14

Yeah, it's rounded to 4.9%

Answer 15

okay thannk you (:

Answer 16

Np. Feel free to fan and tag me into more questions.

Answer 17

sure will (: