Jane Investor purchased a $10,000 bond at 90. The annual interest is 5%.

What was the cost of the bond?

What was the annual interest?

What is the yield (to the nearest tenth of a percent) ?

The cost of the bond was 90/100 times $10,000, that is, $9,000 total.

The annual interest is 5% of $10,000, that is, $500.

The current yield is 5% divided by (90/100), that is 5.555%; round to 5.6% as instructed.

The yield that real bond buyers would be more interested in is the yield to maturity, but this cannot be calculated without knowing the term (number of years). If it's a short term bond that will pay you back $10,000 in just a few years, that would add several percent to the yield, but if it's a 15-year bond the growth of the $9,000 to $10,000 adds only a fraction of 1% to the yield.