A Bond Has a Current Market Value of $800

question 8

Multiple Choice

A bond has a current market value of $800. The holder of the bond will receive a single payment of $1,000 one year from now. The interest rate is 10 percent. The effective yield on the bond is:

• A) $200.
• B) 10 percent.
• C) 25 percent.
• D) negative.
• E) The yield cannot be determined with the information provided.

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