John buys a $1,000.00 bond that pays 6% annual interest at 75. What is John’s annual yield?

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math question

1 Answer

  • The question can not be answered without knowing the number of years till the bond matures.

    $60.00 plus $250 divided by the number of years to maturity.

    Divide the result by 875 and you will have the yield to maturity on an annual basis.

    875 = the bond purchase price (75 or $750) plus the par value ($1000) divided by 2

    Source(s): Series 7 General Securities License holder

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