Neco 2020 Commerce Question 18
Practice objective / multiple choice question 18 from the 2020 Neco Commerce examination.
A 5‑year government bond with a face value of \(10,000\) naira pays an annual coupon of \(8\\%\) of the face value, payable once each year. The bond is currently selling for \(9,200\) naira. An investor is also considering a stock that pays a dividend of \(800\) naira per year and is currently priced at \(10,000\) naira. The investor requires a minimum yield of \(10\\%\) per annum. (a) Calculate the bond's yield to maturity (to two decimal places). (b) Determine which investment meets the required yield and state the excess yield (in percentage points) of that investment over the required rate.
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About This Question
This is Neco 2020 Commerce Question 18. It is one of the objective questions from the 2020 Neco Commerce examination.
Difficulty level: Hard .
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