Answer:
The cost of 5 bonds $1,000 purchased by Joe McCain is at 89%.
it means cost of 5 bond each having cost $ 1,000 is ,
[tex]=\frac{89}{100}\times 1,000\\\\=890[/tex]
Cost of 5 bonds which were $ 1,000 is available at $890.
Cost of one bond
[tex]=\frac{890}{5}=178[/tex]
Cost of one bond =$ 178
Bond pays 6% interest.
Interest on one bond
[tex]=178 +178\times\frac{6}{100}\\\\=178 \times \frac{106}{100}\\\\=178 \times 1.06=188.68[/tex]
Interest = 188.68 - 178=$ 10.68
So, total interest on 5 bonds = 5 × 10.68=$53.40
It can be either monthly or yearly , as it is only written that bond pays 6%.
The Yield is given as,
there is no commission, no closing price
[tex]=\frac{\text{Interest income}}{\text{Bond investment}}\times 100\\\\=\frac{53.40}{890}\times 100\\\\=\frac{534}{89}\\\\=6[/tex]
So,yield is equal to interest paid by the bond=6%
