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A 10-year, 8% bond pays semi-annual coupon payments. If the face value is $1,000 but the bond sells for $940, what is the annualized yield on the bond?.

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%

To learn more about bond yield, please check: https://brainly.com/question/27287677

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