You purchase a $500 bond that pays 2% coupon yield ($10), and the bond is currently trading for $400. what is the current yield?

2.5%

Step-by-step explanation:

For someone who pays $400 for the bond that gives $10 in returns, their yield is ...

... $10/$400 × 100% = 2.5%

Comment on the problem

It is unclear what yield is to be calculated, since the problem statement seems to be about a bond you own. Your yield remains 2% as long as you own the bond. If you sell the bond for $400, likely you will experience a loss (unless you've held the bond more than 10 years). The yield calculated above is that for a similar bond someone purchases for $400 that pays the specified dividends.

x = 25

step-by-step explanation:

a^2+b^2=c^2

7^2+24^2=c^2

49+576=625

sqrt625=25

x=25

we have three similar triangles, because each has a right angle and shares an angle.   let's write the angles in order: opposite to short leg, long leg, hypotenuse.

cab similar to bad similar to cbd

or as ratios,

ca: ab: cb = ba: ad: bd = cb: bd: cd

we also know

ac = ad + cd

(ad+cd): ab: cb = ba: ad: bd = cb: bd: cd

(ad+cd)/cb=cb/cd

we have cb=6, ad=5 and seek x=cd.

we reject the negative root and conclude x=4

answer: 4