Based on the features of the bond, the cost is $700, the annual interest is $40 and the yield is 5.71%.
What is the bond cost?
This can be found as:
= 70/100 x 1,000
= $700
What is the annual interest?
The formula for this is:
= 4% x 1,000
= $40
What is the yield?
This can be found as:
= Annual interest amount / Cost of bond x 100%
= 40/ 700 x 100%
= 5.71%
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