Answer:
16.7 percentage
Explanation:
bond price = $1000 - $100 = $900
fixed amount / bond price * 100 = IR
(150/900) * 100 = 16.7%
The reason for this equation is that interest rate is the amount a lender charges for the use of assets expressed as a percentage of the principal.
originally the price if the bond is $1000 which later falls by $100, so that leaves us to a $900 bond rate.
The interest rate is typically noted on a annual basis known as the annual percentage rate (APR).
Based on the information given the interest rate yield to a new buyer of the bond is 16.7%.
Using this formula
Interest rate yield = Annual Interest Payment / Market Price
Where:
Annual interest payment=$150
Market price=($1,000-$100)
Let plug in the formula
Interest rate yield= Â $150 / ($1,000 - $100)
Interest rate yield=$150/$900
Interest rate yield = 0.1667×100
Interest rate yield= 16.67%
Interest rate yield=16.7%(Approximately)
Inconclusion the interest rate yield to a new buyer of the bond is 16.7%.
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