Answer:
C) 14%
Explanation:
The nominal annual yield is exactly the same as the bond's annual coupon rate. The nominal annual yield is calculated as a fixed percentage of the bond's par value and it doesn't change if the market price of the bond increases or decreases.
The bond's current yield is the actual interest rate that the bond is paying since its calculation is based on the bond's market price, not its par value.
The annual coupon rate of the bond is 16.22% (approx 17). The annual coupon rate is the estimated income that an investor will receive if he holds a particular type of bond.
The given information are:
The following formula is used in estimating the coupon rate:
[tex]\text{Coupon Rate} = \dfrac{\text{Annual Coupon payment}}{\text{Par Value of the Bond}}[/tex]
[tex]\text{Coupon Rate} = \dfrac{\text{Annual Coupon payment}}{\text{Par Value of the Bond}}\\\\\text{Coupon Rate}=\dfrac{162.2}{1000}\times 100\%[/tex]
[tex]\text{Coupon Rate} = 0.1622\times 100\%\\\\\text{Coupon Rate} =16.22\%[/tex]
Therefore, the correct option is d.
To know more about the annual coupon rate on the bond, refer to the link below:
https://brainly.com/question/16265303
