Money Yielded Percent= 200(S+D-C)/C, where C is the cost of purchasing the 10 year saving bond, D is the amount of dividend received, S is the selling price of the bonds, and Money Yielded is the yield of the investment as a percent. If Julie purchased $200 worth of bonds, received a dividend of $10, and sold the bonds for $230 six months after purchasing them, what was the yield of her investment according to the formula?

A. 8%

B. 10%

C. 18%

D. 24%

E. 40%

Answer

We are told that the yield is 200 {(S + D - C)/C, where D is the dividend received, S is the sale price, and C is the cost of purchasing the bonds.

Plugging the values given into our formula, we get y = 200(230 +10 - 200)/200. The product of these two terms will have a 200 in both the numerator and the denominator, and so these will cancel out. We are left with: y =230 + 10 - 200 = 40. We were told in the question that y is a percent; choice E, 40%, is therefore correct.

Answer - Choice E

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