Calculate the current yield on a bond that has an annual interest payment of $200 and a resale price of $1,550. What is the relationship between bond prices and yield?
What will be an ideal response?
The current yield on a bond that has an annual interest payment of $200 and a resale price of $1,550 is $200/$1,550 = 0.129, or 12.9 percent. There is an inverse relationship between bond prices and yields.
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What will be an ideal response?
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