Using the Yield-Approximation Formula Discussed in Your Text, Determine the Average

Multiple Choice

Using the yield-approximation formula discussed in your text, determine the average annual yield on a bond whose current price is $800, par value is $1,000, coupon rate is 15 percent and whose term to maturity is 5 years. Your answer is (to the nearest percent) :

A) 35 percent
B) 21 percent
C) 16 percent
D) 12 percent
E) 9 percent