Asked by demeris moore on Jun 20, 2024
Verified
An investor bought two bonds-bond A was a 9% bond at 106 and bond B was a 7% bond at 94. The commission was $5 per bond. Compute how much greater the current yield from bond A is than from bond B. (Round yields to two decimal places.)
Current Yield
The annual interest income of a bond, calculated by dividing the annual interest by the current purchase price.
Bond A
A type of fixed-income investment where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.
- Understand the concept of current yield and how it can be contrasted among different bonds.
Verified Answer
AN
Learning Objectives
- Understand the concept of current yield and how it can be contrasted among different bonds.