What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $925, if it pays 6% fixed interest for the duration of the bond?

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02-05-2022
Mathematics

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What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $925, if it pays 6% fixed interest for the duration of the bond?

Sagot :

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Okpalawalter8idn Okpalawalter8idn · Answer 1 · 2022-05-13T07:05:28-04:00

For a $1000 face value purchased at a discount price of $925, if it pays 6% fixed interest for the duration of the bond is the yield on a corporate bond mathematically given as

Yield = 6.5%

What is the yield on a corporate bond?

Generally, the equation for the interest paid is mathematically given as

Interest paid = value of bond x Interest rate

Interest paid = 1000 * 6%

Interest paid = 60

Therefore

Yield = Interest paid / Price paid

Yield = (60 / 925)x 100

Yield = 6.5%

In conclusion, the yield on a corporate bond is
Yield = 6.5%

Sagot :

What is the yield on a corporate bond?

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