Respuesta :
The annualized yield on the bond that pays a semi-annual coupon, given its face value and the selling price is 4.46%.
What is the annualized yield on the bond?
The yield of a bond is the return that equates the cost o the bond to its coupon payments and face value.
The yield of a bond can be determined using a financial calculator:
- Cash flow in year 0 = -940
- Cash flow each year from year 1 to 20 = 40
- Cash flow in year 20 = 1000
Yield = 4.46%
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