If the Current Yield for a $1,000 Corporate Bond Is

question 1

Multiple Choice

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

• A)$10
• B)$72
• C)$80
• D)$90
• E)$100

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Definitions:

Required Rate of Return

This refers to the minimum expected yield by investors to compensate for the risk of the investment.

Financial Break-Even

The point at which total revenues equal total costs and expenses, leaving no net profit or loss.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business venture for the first time.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life.