Math  /  Word Problems

QuestionGreat Northern Railway has perpetual bonds. Current price is \$1,120, pays \$45 semiannually. Find semiannual yield and annual yields.

Studdy Solution
To express the yield as a percentage, multiply the decimal by100.
Effectiveannualyield=0.082times100=8.21%Effective\, annual\, yield =0.082 \\times100 =8.21\%The implied semiannual yield on these bonds is4.018%, the nominal annual yield is8.036%, and the effective annual yield is8.21%.

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